Over the years many older homeowners who have had equity in their homes have drawn on this equity and used the money for a variety of purposes, from making repairs and improvements to the home to treating themselves to a once in a lifetime trip overseas.
According to a recent report many pensioners who are drawing on their home equity are now using the money to repay debt. Figures show that around one third of retired pensioners that are taking equity from their properties are now using the money to repay their debts. The research was carried out by the University of Birmingham, and was on behalf of the charity Age UK.
The most common reason for taking equity from the home for retired pensioners was still to carry out repairs, improvements, and maintenance in the home, and around half of all those taking equity from their homes were using the money for these reasons. Key Retirement Solutions, the equity release specialists, have said that this year older people will spend around £550 million on home improvements.
Like many other people a rising number of pensioners have accrued more debt over recent years as a result of the financial crisis and the recession, and using their home equity has become an effective solution for many of these older homeowners to repay the debt and ease their financial problems.
One consumer said: “My elderly aunt had built up a fair amount of debt in terms of credit cards and loans over the years, and now she’s retired repayments were becoming a struggle. However, she did have cash tied up in her home so rather than struggling along each month we advised her to use the money that was in her home to clear the debts and then spend some time enjoying retirement.”
