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The release of equity (value) in your home to partially or fully repay your debts

In a nutshell Equity release is an alternative to remortgaging for those aged 55 and over. Choosing an equity release from among your possible debt solutions can act as debt consolidation.

This form of debt solution uses equity within your property (e.g. the difference between the market value of a property and any money owed on it – such as the existing mortgage).

There are four forms of equity release: interest only lifetime mortgages; lifetime mortgages; home reversion plans and retirement mortgages.

The borrowed money will be repaid upon death or moving into a care home.

Deciding to release equity from your home is not a decision to make lightly, and it’s advised that you seek impartial advice from trusted debt experts.

What debt problems is this debt help suitable for?

Those seeking debt help who are over 55 who are no longer eligible, or who have a low chance of being accepted, for a remortgage.

Our debt expert’s opinion on the pros and cons…

Advantages of Equity release debt solution

  • The loan may be tax deductible.
  • You could boost your pension income.
  • The released money is free for you to use however you wish.
  • Unlike other types of debt solutions, you won’t face increased outgoings.

Disadvantages of Equity release debt solution

  • An equity release could affect any benefits you receive.
  • The average lending rate of equity release stands at around 5.14% (notably higher than most standard mortgages).
  • Should one spouse die, the equity release terms could result in the surviving spouse being required to move out of the property to repay the equity.
  • This debt solution is restricted to those over 55.
  • If you don’t tread carefully it can be an incredibly expensive debt solution.

 

It’s worth noting that an alternative to equity release that avoids these downsides could be the option of downsizing.

*An Individual Voluntary Arrangement (‘IVA’) is subject to the customer meeting qualifying criteria and gaining creditor acceptance. Monthly IVA payments include fees and may differ to the example provided, based on the assessment made of your own personal circumstances – these fees will be clearly explained to you in writing by your IVA company. Debt write off amounts are subject to creditor acceptance and vary by individual customer based on their own financial circumstances, and are applied upon successful IVA completion.

Substantiation example, Someone owes £60,000, they pay £100 over 60 months which equals £6000, write off amount would be £54,000 which is 90% of total debt level. Upon submitting your details on this website we will pass your details to one of our approved partners as this website does not give any advice.

Free debt counseling, debt adjusting and credit information services are available from the Money Advice Service.

National Debt Help
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