Age UK : Over 50s using equity to pay off mortgage and debts
- Published on Tuesday, 17 December 2013 15:42
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Internal data from Age UK Enterprises reveals how a significant number of those in later life are using equity release products to pay off outstanding mortgages and unsecured debts.
Just over a quarter (27%) of funds released by Age UK Enterprises equity release customers were used to clear their mortgage, with another 19% of funds used to clear other debt. In addition to paying off mortgages and debts, one in five (21%) are using equity release to fund home improvements and 8% are using it to help a family member.
As the Financial Conduct Authority (FCA) recently reported on the number of borrowers facing shortfalls at the end of their interest-only mortgage term, Age Scotland has been calling on lenders to work with older mortgage borrowers to find affordable and realistic solutions and remove arbitrary age limits. For some equity release is also an option but Age Scotland Enterprises recommends that anyone looking to release equity from their property to pay off debts also undertakes a benefits check to see if there may be any alternatives to releasing equity or any additional benefits they may be entitled to. Currently only 23% of all women over 60 and men over 65 have had a benefits check.
Logan Steele, General Manager Age Scotland Enterprises, said: “There is a portion of society who is reaching the end of their mortgage term with debts still to pay and this is a particularly concerning issue for those in retirement who have a fixed income. Those who find themselves in this situation need to consider all the options available to them. These include downsizing, accessing grants, using savings, discussing the issue with their family and getting a benefits check or shopping around to secure the best annuity possible if relevant.
“Equity release is a big decision and is not right for all circumstances but for some it can be a good way to access much-needed funds and keep the family home. With the significant pressures on older people’s finances, tailored products and services designed to meet the individual needs of this demographic and help them better manage or maximise their money are vital. Older people should be encouraged to shop around as much as possible to secure the best deals on the market.”