Retirees releasing equity to combat debt
17/03/2010Thousands of older people are being forced to release equity from their homes in order to get on top of their personal finances having built up credit cards debt.
According to Key Retirement Solutions, the average retiree taking out an equity release plan owed nearly £9,000 on credit cards.
The figures suggest that unsecured personal debt is causing significant loss of income in retirement for many older people.
Newly retired people often find themselves unable to cope with standing amounts of debt when they discover that their monthly incomes have plummeted once they give up work.
This can lead them into unsustainable levels of debt, particularly on high-interest forms of borrowing, such as credit cards.
Being unable to make minimum repayments can quickly cause even a small amount of debt to become unmanageable.
Atlantic director Vance Parsons says: "Over-60 clients on a Atlantic Debt Management Plan (DMP) typically have over £29,000 of unsecured debt with over 8 creditors and probably at least 3 of these are credit card debts.
"Lifetime mortgages can be appropriate to support an overall debt solution, but specialist financial and debt advice is necessary with the financial and debt advisor working in tandem."
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