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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.

Get your free guide

Download your free guide to see how equity release works

I want to calculate

Take the next step and find out how much you could release with our free equity release calculator.

I want to get advice

Or, if you would like to discuss your options with one of our friendly expert equity release advisers, request a free call back here.

Things to consider

  • All our equity release mortgage advice relates to Key lifetime mortgages only - a loan secured against your home
  • Equity release will reduce your estate’s value and may affect your entitlement to means-tested benefits
  • A lifetime mortgage may result in limited or no property equity remaining and will reduce your financial options in the future
  • You should always think carefully before securing a loan against your home to repay existing debt
  • The loan, plus compound interest, is typically repaid through the sale of the property when the last remaining applicant passes away or moves into long-term care
  • £899 advice fee only payable on completion
* 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: Thursday 29 June 2023