It’s no secret that 2020 has been hard on most of us, and as the East Midlands area looks set to have a surge in COVID-19 cases over the next few months, residents are set for a winter of discontent.
With growing credit card debt, mortgage and loan repayments to consider, more and more of over 55s are turning to equity release in a bid to help with solvency. New figures suggest that a third of people in the East Midlands who use equity release are using it to help with debt.
The UK and equity release
Over the last few decades as house prices soar, older people especially, have found themselves asset rich and cash poor. Whilst some choose to downsize to areas that are more affordable, for others this isn’t an option. You can release equity from your house, without having to move, and this is proving popular throughout the UK.
Unsurprisingly, older homeowners in the capital turn to equity release to help with debt repayments. Recent figures from Key suggests that 47% of London residents rely on equity release to help them continue living in the capital.
Yorkshire has the highest number of over 55s using equity release to pay off debt, with nearly half of all homeowners (49%) using equity release. This figure could rise over the coming years as a no-deal Brexit could have catastrophic implications for many of Yorkshire’s largest industries, including farming, manufacturing, and finance.
How the East Midlands uses equity release
Here in the East Midlands, only 33% of households have sought to pay of debt with their equity release funds, which is one of the lowest in the UK. Interestingly, 71% of those are using it to pay of debt, while only 14% are using the funds to pay credit card debt. Thanks to property values rising over time, equity release offers older homeowners the chance to cash in on the value of their home. The extra funds that were once used to pay off monthly mortgage repayments can be used to offer a higher standard of living in retirement.
How the rest of the UK uses equity release
The East Midlands isn’t alone in using equity release to pay off mortgages. In fact, every area – except the North East, has seen over 50% of homeowners who use the funds for debt are using equity release to pay off mortgages.
Will Hale, CEO at Key says: “[Equity release] allow(s) people to retire with confidence, without the burden of needing to make regular monthly payments or face the prospect of having to sell their home.” Of course, if you are considering equity release, it’s important to speak with a financial adviser to ensure you’re fully aware of the implications.”