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This article is aimed at our older customers, if you are under the age of 60, you will find this page contains more relevant information: Remortgage for Debt Consolidation.
For homeowners over 60, managing monthly expenses can sometimes become challenging. If debt repayments are impacting your monthly budget, releasing equity from your home could be a smart way to gain financial flexibility and reduce debt.
There are lots of different ways we can do this, our over 60s mortgage advisors will recommend the best way forward for your individual situation.
Equity release is a way to access the value in your home without having to sell or move. It allows you to turn a portion of your property’s worth into cash, which can then be used for debt repayment. There are various products available to do this:
Depending on your individual situation, releasing equity to repay debts may be available via a traditional mortgage product also depending on various factors.
Your mortgage advisor will recommend the best product for your individual situation.
When consolidating debts, it is important to seek professional advice to avoid ending up in a worse situation or even losing your home in the event of non-payment.
Debt repayments can take a significant portion of retirement income, making it harder to enjoy everyday life or cover essential costs.
Releasing equity to pay off debt can offer a simple way to reduce your monthly outgoings and relieve financial pressure.
Unlike traditional loans, most equity release products, like lifetime mortgages, don’t require regular repayments unless you choose to make them.
This means that you won’t need to worry about additional monthly commitments; the amount borrowed plus any interest is usually repaid when the property is sold, either when you pass away or move into long-term care.
There are several products and loan options available for homeowners over 60 who want to consolidate debt. Here’s an overview:
This is the most common form of equity release. It allows you to borrow a portion of your home’s value while retaining ownership. You can choose to make interest payments or allow the interest to accumulate over time.
With this option, you sell a share or all your property to a provider in exchange for a lump sum or regular income. You retain the right to live in your home, typically rent-free, while the provider benefits from a share of your home’s future sale proceeds.
Traditional mortgage options may still be available to those over 60 and can provide a fixed repayment structure to help clear debt. These include repayment and interest-only mortgages, depending on your financial circumstances.
RIOs offer a lifelong interest-only option specifically for older homeowners, with monthly interest payments while the loan amount remains secured against your property.
A secured loan, or second charge mortgage, allows you to borrow against your property to consolidate debts, without disturbing your main mortgage. This can be beneficial if your existing mortgage has favourable terms you’d like to keep.
Bridging loans are short-term lending solutions ideal for quickly settling debts or urgent financial needs. These loans are often used for property-related purchases or improvements, but they can also be used to consolidate debt when a swift solution is required.
Often the most suitable solution for a client is a combination of the above products, we can work together to find the best way forward.
Here are some of the main pros and cons to consider when releasing equity to pay off debts in later life:
The list above is only a short guide, our team will help you explore the options that are personal to your situation.
Not always, deciding to release equity or take out a loan to consolidate debt is a big step.
It’s important to consider your long-term financial goals, family priorities, and the potential impact on the value of your estate.
Taking the time to understand each option, including costs, repayment terms, and the benefits of each, is essential for making the right decision.
Speaking with a mortgage advisor can be especially helpful for those over 60.
An advisor with experience in later-life lending can help you explore these options and find the right product, whether it’s a lifetime mortgage, home reversion plan, traditional mortgage, RIO, secured loan, or bridging loan.
They’ll consider your financial goals, family needs, and estate planning to recommend the best solution for you.
Debt consolidation is a high-risk product therefore it is important to seek professional advice from a mortgage broker to ensure you understand both pros and cons and avoid ending up in a worse position.
If you’re ready to find out more about your options and how they can help improve your financial wellbeing, reach out to our team today.
We’re here to answer your questions and guide you toward a choice that suits your needs.
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UK Moneyman Limited is Registered in England, No. 6789312
Registered Address: 10 Consort Court, Hull, HU9 1PU.
Authorised and Regulated by the Financial Conduct Authority.
We are entered on the Financial Services Register No. 627742 at www.register.fca.org.uk
UK Moneyman Limited is Registered in England, No. 6789312
Registered Address: 10 Consort Court, Hull, HU9 1PU.
Authorised and Regulated by the Financial Conduct Authority.
We are entered on the Financial Services Register No. 627742 at www.register.fca.org.uk
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