The more people I speak to born between 1940 and 1948 who are not debt free reminded me to share an acronym for FEAR – Face Every thing And Release…….. Equity!
The number of people entering retirement with a mortgage in tow has greatly increased recently for a number of reasons.
Many of the baby boomer generation who thought they would be mortgage-free by the time they hit retirement have now realised this will not be the case; even more worrying for large numbers of retirees is the fact that many of the mortgages they have are interest-only with no repayment vehicle in place in order to be able to pay off the capital.
On top of this a number of lenders are calling for the repayment of that capital at some point in retirement and this is causing much anxiety amongst the over-65s – not forgetting the problem of course that a number of borrowers are already finding that their retirement income is not enough to service the loan.
Here is a Case study; using equity release to repay a mortgage
After the death of her husband Patricia* bought her house using an interest only mortgage which wasn’t due to finish until she turned 90. Patricia, 77, was finding it increasingly difficult to meet her interest payments and had concerns about how she would repay the capital at the end of the mortgage term.
Patricia contacted a specialist equity release adviser, and after considering alternatives such as trading down, they identified that a home reversion plan would raise sufficient funds to repay her mortgage. As with all equity release products, Patricia’s adviser recommended she talk to her family and discuss the plan and what it would mean. Patricia has five children, four of whom own their own homes. After discussing her plans with, them they were happy for her to go ahead with the reversion.
Patricia completed her Home Reversion Plan in late 2011. The money Patricia released enabled her to pay off her mortgage, credit cards and a bank loan. Patricia was also able to book a holiday and can now comfortably live on her pension as she no longer has any debt to service.
If you need to know more please contact me an Equity Release Council Member on 0800 3112027 to discuss your current situation
No advice is being given or implied. There are a number of forms of equity release and alternatives to equity release. It is vital customers seek appropriate financial advice to ascertain what options may be suitable for them.