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The worrying rise of unsecured debts among over-55s

Our money habits are changing. Ensuring financial security in our later years is a growing challenge. So much so that many over-55s have turned to unsecured credit.

Between 2014 and 2018, there was a rise of more than a third in the number of 55-74 years olds using credit cards, unsecured loans and the like*.

The young are often thought of as today’s biggest credit users. However, that increase among 55-74 year olds was more than twice the national average*.

Why was there such an increase?

The most common form of debt incurred by over-55s is through credit cards. Simply put, nearly one in three are spending more than they’re paying off each month*.

And it doesn’t stop there. Almost one in six use unsecured credit to repay other, pre-existing debts*.

Chasing your tail in this way can contribute to severe health problems. People with significant debt issues are twice as likely to suffer from depression than those without*2.

That said, tackling the costs of debt can be a struggle and even if you have savings, it’s not always possible or sensible to use them.

So, is there another solution? Yes.

Another solution

Alongside significant growth in the number of over-55s using unsecured credit, 2018 also saw an almost 10% rise in those using equity release to pay off existing debts, compared to 2017*3.

Unlike conventional credit cards or bank loans, there are typically no monthly repayments with an equity release plan.

You receive your tax-free cash in either one lump sum or an initial lump sum followed by smaller amounts, depending on your preference. And the amount owed, plus roll-up (or compound) interest, is paid off when your plan comes to an end. That’s usually when the last living applicant either passes away or goes into long-term care.

You can even take a lifetime mortgage, the most popular type of equity release, in the form of a regular income, should you want a more frequent cash flow.

There are a number of features available with equity release plans designed to give you maximum flexibility and peace of mind. These include the no negative equity guarantee, meaning you’ll never owe more than your home’s worth, and inheritance protection, which gives you the chance to earmark a percentage of your property’s future value so you can pass it on as part of your estate.

Of course, equity release is not for everyone. There are other options available.

When you have your free, no-obligation appointment with one of our expert equity release advisers, they will tell you if they believe it’s not right for you.

After all, good advice is Key.

Things to consider
 
Our specialist, independent equity release advisers compare the whole market to find the most suitable equity release plan for you. They’ll discuss all the options available and explain that taking an equity release plan reduces the value of your estate and may affect any means-tested benefits you’re entitled to. Taking expert advice before releasing equity is a regulatory requirement.

With a lifetime mortgage, the most popular form of equity release, you’ll still own your home. It’s a loan secured against your home and is repaid when you, or the last surviving applicant, pass away or move into long-term care.

Key’s initial consultation is free and you have no obligation to proceed. If you decide to go ahead, our advice fee, usually 1.99% of the amount released, subject to a minimum of £1,499, is payable only on completion.

You should always think carefully before securing a loan against your property.

* more2life research
*2 https://www.moneyandmentalhealth.org/money-and-mental-health-facts/
*3 Key’s Market Monitor data 2017-2018

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