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Clear existing debt

Finances in retirement can be a juggling act, so finding the funds to manage monthly payments can give you peace of mind.

Debt in retirement

According to a recent survey, only 28% of people currently planning to retire feel they have saved enough for a comfortable retirement. To add to this, 48% still owe money on credit cards, while 31% still have an outstanding mortgage, meaning they have regular monthly payments to meet on top of their household bills.*

Having large amounts of debt like this can severely strain your savings once you retire and can be difficult to pay off.

Even the best-laid retirement plans can be spoiled by existing debt. So it’s good to start your non-work life on a strong financial footing.

While incomes traditionally fall at this time of life, finding the funds to manage monthly payments, as well as doing all the things you want to in later life can be a struggle.


* Research conducted by Research Plus between 18 and 31 December 2019 among a sample of 1,000 people expecting to retire during 2020 
 

Can you use equity release to pay off existing debt?

Nearly half of over 55s have been preparing their retirement finances by paying off debt using equity release.**

There is no minimum or maximum level of debt you need to have to look at equity release as an option. However, it’s more likely to be suitable for you if you have debts that you cannot afford to pay off using your regular income.

By releasing some of the funds from your home, you can use it to pay off debts such as an existing mortgage, balance on credit cards and loans, car finance payments or other loans.
 

Freeing up your income

With a lifetime mortgage, the most popular type of equity release, there are typically no monthly repayments to make, as the loan plus roll up interest, is repaid when the plan comes to an end.

By paying off your debt with this type of plan, it allows you to stop making monthly repayments on your existing debt and free up your day-to-day cash.

The amounts people release vary starting from £10,000 and there is no tax to pay on the money released.

 

Should you use equity release to pay off your debt?

If you’re a homeowner aged 55 or over, equity release could be a way for you to pay off a range of existing debt. However, it’s not right for everyone.

At Key Equity Release, our specialist equity release advisers will discuss your needs with you and ensure you consider your options. If equity release isn’t right for you, we’ll tell you.

All our equity release advice relates to our range of Key branded products only, and our fixed advice fee of £499 is only payable on completion, so you can find out if it's right for you without it costing you a penny. 

Things to consider

Your specialist equity release adviser will explain:

  • It's a Financial Conduct Authority requirement you receive specialist advice from a qualified equity release adviser before releasing tax-free cash from your home. Please read all our information and make sure it's right for you
  • Key Equity Release offer lifetime mortgages only, which is a loan secured against your home. It will reduce the value of your estate and may affect your entitlement to means-tested benefits
  • All of our plans meet the Equity Release Council standards and come with several protections, including the no negative equity guarantee, which means you’ll never owe more than your home’s value
  • All our equity release advice relates to our range of Key branded products only, and our fixed advice fee of £599 is only payable on completion
  • You should always think carefully before securing a loan against your home
 
* Research conducted by Research Plus between 18 and 31 December 2019 among a sample of 1,000 people expecting to retire during 2020 

 
** Key’s Market Monitor HY1, 2020
Page last updated: Tuesday 08 March 2022