Can I release equity to pay off existing debt?

Finances at any age can be a challenge; in retirement they can often feel like a juggling act. Finding the funds to manage monthly payments can give many the peace of mind they’ve been searching for.


Using equity release to pay off existing debt

According to data from the Office of National Statistics (ONS), the number of people aged over 65 in financial debt increased by 7.7% over the last two years to 1.65 million. These debts have potentially been driven up by rising life expectancies, meaning that pensions and savings are having to stretch further than ever before.

Having existing debt in retirement can add a lot of unnecessary stress and worry to what should be a relatively relaxing time in your life. Whether you still have regular monthly payments to take care of or want to do all the things in later life that you should be able to, releasing some of the equity from your home could be a way to pay off some of, or all of, your current debt.

The funds released via equity release are tax free and you could spend them in a variety of ways to help clear existing debt:

  • Paying off loans for items such as sofas or new kitchens

  • Paying off credit card debt

  • Paying off the remainder of a car loan

  • Helping to pay towards a family member’s debt

If you’re only meeting the minimum payment on your existing debt, it can feel as though you’ll be paying it off for a long time. Nobody enjoys using their retirement savings to make monthly repayments on credit and store cards that often have extremely high interest rates. Don’t let your existing debts spoil what should be an enjoyable time in your life.

Explore your options to potentially release equity from your home to clear existing debt; our team of friendly expert equity release advisers can help you decide whether it’s the best option for you.


What are the benefits of releasing equity to help clear existing debt?

It’s important to explore your options and get independent advice from a qualified professional adviser before releasing some of the equity from your home. There are a number of benefits to releasing equity from your home to help give you more financial freedom when you retire.

  • Depending on the equity release product you choose, you could either receive a lump sum or drawdown funds when needed following an initial release. These could help with bills, home improvements, financial help to loved ones etc.

  • You could pay off existing credit or store cards in full to relieve some pressure.

  • You’re able to remain in your home for as long as you need to.

  • Plans that meet the Equity Release Council standards can be transferred to a new home, subject to criteria. The plans also come with several assurances, including a 'no negative equity guarantee', meaning you'll never owe more than your home's worth.

  • With some plans you can set aside part of your property's future value as an inheritance. Inheritance Protection allows you to ring fence a percentage of your property's future value to be passed on as an inheritance, subject to criteria.

  • The loan is usually repaid when you or the last remaining applicant passes away or moves into long term care.


Speak to the experts today

If you’re thinking about whether or not you should release equity from your home to help clear existing debt, speak to our experienced team today. They’ll be able to talk to you about your options as well as what’s important to you, to make sure the product you choose is the best one for you.

See how much you could release by using our free equity release calculator or get in touch with us on 0800 188 4812 or via our contact form.


Things to consider with equity release

  • A lifetime mortgage, the most popular form of equity release, is a loan secured against your home.

  • Typically with a lifetime mortgage there are no monthly repayments to make as the loan plus roll up interest is repaid when the plan comes to an end.

  • Equity release will reduce the value of your estate and may affect your entitlement to means tested benefits.

  • You should always think carefully before securing a loan against your home.

  • Unless you decide to go ahead, our service is completely free of charge as our fixed advice fee of £1,799 is only payable on completion of a plan.