OVER-55S OPT FOR EQUITY RELEASE TO EASE DEBT

THE demand for equity release is likelyBy to continue as debt among older Britons continues to rise inexorably.

Credit card debt has hit a six-year high, according to new figures from equity release provider Aviva, while overdrafts are also spiralling.

Among the over-55s, credit card debt has hit a post credit-crunch peak of £1,052, up 9 per cent since last year, while overdrafts increased by a hefty 17 per cent.

Over-55s who are still working owe almost twice as much as their retired counterparts, a total of £2,490 excluding mortgages.

Lindsey Rix, managing director, savings and retirement at Aviva, says this suggests that servicing and clearing this debt may be a factor in more of this age group working into later life: “Many are now facing the prospect of paying off a mortgage and other debts well into retirement.” NE aq mu itey yr eH lee arsey may also be a lifeline for hundreds of thousands of homeowners who are heading towards retirement with unpaid interest-only mortgage debt, after their endowment investment policy underperformed.

City watchdog the Financial Conduct Authority calculates that around 600,000 interest-only borrowers will see their mortgages mature between now and 2020, with almost half struggling to clear the debt because the endowment that was set up to pay off the mortgage will leave them with a large shortfall.

Dean Mirfin at Key Retirement says paying off this debt is an increasingly popular use for equity release, with one in four using some of the payout for this reason: “Many people are likely to find this far more appealing than selling up and trying to downsize to clear off any outstanding mortgage debt.”