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Equity Release for Clearing Debt

Mr and Mrs Johnson had built up a debt on their credit cards. At first, it had been a gradual build-up as they used the credit cards to maintain their standard of living. Eventually, however, they had started being unable to make all the required monthly payments and had started incurring penalty charges for the missed payments. Once this started, the debt rose quickly and soon they started receiving telephone calls asking for payments to be made.

Mr and Mrs Johnson spoke with a debt advice service and one of the options suggested to them was to look into equity release. They are both in their sixties, so met the minimum age requirement for equity release of fifty-five, and they own their own home.

They spoke with an equity release adviser and confirmed to him that they had debts totalling just under £25,000 and the interest the credit cards were charging varied between 17.9% and 25.9%. Having also looked at their income and outgoings, they could not really afford to make any monthly payments towards the debt.

Mr and Mrs Johnson felt uncomfortable selling their home and so their adviser recommended a lifetime mortgage as this allowed them to raise sufficient funds to pay back their credit card debts. Taking out a lifetime mortgage meant that they maintained ownership of their property and were not required to make any monthly payments.

Equity release may involve either a lifetime mortgage or home reversion plan. To understand the features and risks, ask for a personalised illustration.