Up to half of older homeowners use equity release to repay debt as they struggle to meet payments, new analysis from equity release adviser Key has revealed.
Analysis of customer data suggests that 30% of people are using equity release to repay unsecured debt while 20% are using it to repay mortgages. Debt is a growing issue with customers aged 55-plus owing an average of £10,319 on credit cards and £13,578 on loans. The UK average for people with unsecured debts is £11,830 meaning that some over-55s could have more than double the average amount of unsecured debt.
The biggest single debt burden identified is outstanding mortgages – customers clearing home loans on average owe £87,181, the data shows. Further analysis suggests that the debt issue spreads across age groups – customers in their 70s owe an average of £9,773 on credit cards compared with £10,926 for homeowners in their 60s. However, even some customers in their 80s owe money on plastic with average debts of £10,443.
A significant impact of carrying debt into retirement is the cost of regular repayments – customers are paying off an average £300 a month on credit cards; £282 on loans and £586 in mortgage repayments.