Almost one in four use home equity to clear credit card debt

Almost one in four use home equity to clear credit card debt

New research from Key Retirement has found that 45% of those looking to cash in some of their property wealth still owe money on mortgages and 24% use equity release to pay off credit cards.

Its data for the nine months to the end of September of this year shows that the average balance owed on outstanding mortgages was £85,119. Customers with mortgages are making average monthly repayments of £762.

However it’s not just mortgage debt pensioners need to pay off – 24% owed money on credit cards while a 23% owed money on personal loans.

The research also shows that when compared to the same period of 2016 the average debt levels have increased. Whilst the average mortgage balance has increased by £4,550 the monthly levels of servicing have increased by £369.


Dean Mirfin, group product officer at Key Retirement, had this to say: “Pensioners are clearly struggling with debts and the continuing interest-only mortgage repayment issue is only adding to the pressure. The increase in monthly repayment levels for mortgage may be indicative of the fact that we see many with interest-only mortgages overpaying to repay capital or many borrowers being on lenders standard variable rates.

The advantage that retired homeowners have is they’ve benefited from strong house price growth and have considerable wealth tied up in their homes which they can use to clear serviceable debts and to substantially improve their standard of living.

Debt repayments take a major bite out of monthly incomes with many pensioners having to set aside cash to fund debts which they can clear by taking equity release plans which do not require monthly repayments, with the loan repaid on death or a permanent move into care, when the property is sold.”

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Scott Garnet 06 Nov 2017

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richardrawlings
richardrawlings 01 Nov 2017

What has not been mentioned here is the effect of not only higher interest payments, but also that these payments are less likely to be offsettable as a business cost due to the scaling back of mortgage...

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Kelvin Lloyd
Kelvin Lloyd 09 Oct 2017

IT is up, to the Planners. If they will only give permission for bungalows on certain (suitable) sites, they will be built.

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maggie swift
maggie swift 09 Oct 2017

It's just the beginning of the shocking rise.

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maggie swift
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I have recently read that the bungalows can provide social housing for elderly residents in London.

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Update! Worst company I have ever dealt with. Undervalued a Cambridge property by over 100k, wont take on any evidence of valuation including a RICS valuation done 3 years ago for the very same value...

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Paul Edwards 27 Sep 2017

Its nonsense articles such as this that make it harder to get clients to realise just how difficult the market is out there. When you see Rightmove and there are more 'price reduced' then 'new' most days...

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Tom Allen
Tom Allen 20 Sep 2017

Absolutely agree with you!

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RyanGeo
RyanGeo 18 Sep 2017

A sharp correction would be a less dramatic expression to use. That is already underway in certain sectors in Reading where I practice as Chartered Surveyor

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Identity theft is a thread for any profession. So,people should stay alarmed. I once take help from a letting agent and came to know that letting agents are taking every precaution to prevent fraudulent...

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We have seen a surge in instructions over August and that should continue into September too.

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