Householders use equity release to cut debts

Almost a third of all equity-release customers are using the cash they raise by selling a share in their home to pay off existing debts such as credit cards and loans, new research suggests.

The Equity Release Council has warned the cost-of-living crisis is leading to older people taking on unsecured debts.

"More worrying still is the fact that existing credit users become bigger borrowers who owe more on credit cards, overdrafts and so on as time passes, Nigel Waterson chairman of the Equity Release Council said.

Limited pay rises and the rising cost of living mean many struggle to make their incomes last until the end of each month and people are increasingly turning to credit cards to cover this period."

In addition, the group concludes that increasing numbers of people in their 50s and 60s are using equity release to boost their income and reduce the amount they spend on debt-interest payments.

"For those who are retiring or find themselves in debt beyond the age of 55, using equity release can help to plan ahead, provide a regular income, still protect some of the value of your property and offer far lower interest rates," Mr Waterson added.