Debt Awareness Week: Older Homeowners Write Off £ 612 Million In Debt With Free Equity In 2020

“For those who rely heavily on state pensions, losing 70% of that state support just by meeting these minimum repayments must be devastating.”

Those over 55 used home equity to write off more than £ 612 million in unsecured debt in 2020, according to a new analysis from Key.

Credit cards (on average £ 8,500), overdrafts (£ 2,000) and loan balances (£ 11,700) were most often paid off as people sought to manage their retirement income by cutting spending.

About a fifth (18%) of the £ 3.4 billion real estate portfolio released last year has been used to write off unsecured debt to older clients of all ages facing debt problems. About 14% of customers had credit card balances while 12% had loans to pay off and 6% had to pay off auto financing.

Key is to mark Step Change Debt Awareness Week (March 22-March 28) by highlighting the need for debt counseling and highlighting how clients freeing up equity are using. modernized and flexible plans to solve financial problems.

Key data shows that customers with credit card debt made monthly repayments of around £ 292, while loan repayments averaged £ 267 per month. Even overdrafts cost an average of almost £ 18 a month.

With the state’s basic full pension rising to £ 179.60 per week or £ 9,339.20 per year from April, struggling over-55s would lose more than 70% of their public support just by respecting the minimum reimbursements. Credit card repayments would absorb 37% of their annual income while loan repayments would represent 34% of their annual income.

Using the freeing up of equity to borrow £ 20,000 to pay off the unsecured debt, which is then managed by making ongoing repayments to cover interest, the client would pay £ 42 per month fixed for the life of the loan if they succeeded in guarantee the key market rate of 2.5. %. Depending on the criteria of the lenders, principal payments can also often be made without incurring prepayment charges.

Key CEO Will Hale said: “Unsecured debt is a major problem for people of all ages and our data shows that it affects people aged 70 to 80 as well as younger people. No one wants to retire with debt, but sometimes it is inevitable.

“The problem is that people on fixed incomes will have a hard time paying off their debts and often end up paying the minimum amount each month, which inevitably means that it takes longer to pay off the debt as interest increases. For those heavily dependent on the state pension, losing 70% of that state support just by meeting these minimum repayments must be devastating.

“Those who are struggling with debt should seek support because there are options available. For some, this could mean refinancing debt using a more modern and flexible approach. Equity relief plans that allow people to repay interest and principal are increasingly playing a major role and can help those in difficulty. “

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