Is using equity release to retire debt-free the way forward for today’s retirees?

As we struggle through tough times, it can be comforting to think ahead to our retirement as a time when we’ll be able to look back on the mess that was 2020 and smile. But more of us are entering retirement still in debt than ever before.

In years’ past, if you were to release equity from your house then you would be presented with a lump sum you could use to enjoy your golden years. These days, however, it’s more likely that a large portion of that sum will be used to pay off everything from mortgages to credit card debts and loans.

What do the figures say?

According to a report done by leading equity release firm Key, two-fifths (41%) of all equity released in H1 2020 was used to pay off debts as older homeowners used their property wealth to retirement-proof their finances. Over 40% of the total new equity released was used to cleat some form of borrowing, with mortgages being the most common at 53%.

On average, borrowers still owed over £50,000 on their mortgages, which is a very high mountain for some to climb, particularly those over 65 who find that they either need to repay a significant and unaffordable lump sum or are unable to pay much more than the interest on other borrowings.

Of course, the statistics vary depending on the region. In London, for example, 47% of equity released proceeds are spent clearing debts whilst in the North East, only 29% is. This is because properties in London are that much more expensive and underlines how expectations should perhaps be managed in different areas of the country.

Realistic retirement goals

To really enjoy your retirement, you have to go into it with realistic expectations. According to Key CEO, Will Hale: “While most people want to reach retirement debt-free, this is simply not the case for everyone – especially those who have taken out interest-only mortgages and now often face finding a substantial lump sum to repay the balance. In H1, over £500 million worth of borrowing was repaid using housing equity – allowing people to retire with confidence, without the burden of needing to make regular monthly payments or facing the prospect of having to sell their home.”

Mr Hale certainly has a point. Maybe it’s a matter of pride or the idea of not having as much to leave behind for our children but there is no shame in being able to retire with your head held high and your debts cleared. Better yet, the flexible equity release plans available will allow you to manage your borrowing and shore up your finances. And with the current economic uncertainty, what could be more important than that?

EAN Breaking News

Breaking News from the team at Estate Agent Networking. Have a new story to share with us? Then please get in contact today! When and where we can we will refer to third party websites with a 'live link back' where news was released first.

You May Also Enjoy

Estate Agency Review Websites 2022
Estate Agent TalkSoftware & Tech

Where to find Estate Agency Reviews online

Other than word of mouth, what ways are there for consumers to read up on reviews about their local estate agents? When we are choosing which of the main high street estate agents we are going to use for selling our property, past experiences from their clients can help us to decide which one deserves…
Read More
Love or Hate Rightmove
Breaking News

Fourth new record puts prices £55,000 higher than pre-pandemic

Price of property coming to market hits a fourth consecutive record of £367,501, up by 2.1% monthly (+£7,400): Average asking prices have risen more than £55,000 in the past two years, compared to a £6,000 rise in the two years before the pandemic Activity levels remain strong and still significantly higher than pre-pandemic, though there are signs that the frenetic market…
Read More
Breaking News

WEEKLY NEWS ROUNDUP – 20/05/2022

A roundup of the week’s top property and proptech news stories in partnership with Proptech-X   Table of ContentsHide nurtur.group continues to strengthen its leadership team PRESS RELEASE: BriefYourMarket partnerships take lead generation to next level MyIdentity selects Armalytix to create a proof-of-wealth solution for the property market Is Rishi Sunak to blame for the overheated…
Read More
can you live in a haunted house
Home and Living

Could you live in a Haunted House?

I’m sure that most of us, at one time or another, have had the feeling that we are not alone at home!  Maybe you are someone, like myself, that those little noises at night causes you to pull the bed covers over your head. You’ve spent the evening watching that ghostly horror movie, your senses…
Read More
Love or Hate Rightmove
Breaking News

Property prices double around Elizabeth Line stations

Rightmove’s new Elizabeth Line study reveals asking prices have more than doubled over the past decade in the local areas around Maryland, Abbey Wood and Stratford stations Despite delays in the line opening, the number of buyers looking to move near the stations has steadily surged: Buyer competition is now more than nine times that…
Read More
What will property prices do in 2022
Estate Agent TalkIndustry Interviews

Interview: Mark Hayward and his market forecasts

Residential Expert with Mark Hayward – May 2022 With last week’s relatively uneventful Queen’s speech in the rear-view mirror, now’s the time to assess the current state of the property market and predict what might be round the corner. We spoke to former chief executive of Propertymark and Just Move In ambassador, Mark Hayward, who…
Read More