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Alleviating debt with later life finance

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Financial pressures, such as mounting debt from loans or credit cards, can often cause stress and can affect mental well-being — especially if the debt has arisen from a necessity, such as life-changing surgery. That’s why many people look for ways to consolidate their payments, ease their cash burden and regain control over how much they want to pay and when.

A recent analysis by PwC revealed that total household debt in the UK now exceeds a staggering £2 trillion – equivalent to £71,000 per household, and just below the national GDP. This includes over £400 billion of unsecured debt at an annual growth rate of 7.2%. For many, financial issues, such as debt, have now become a daily burden, as the nation struggles to cope with rising costs.

It is perhaps unsurprising that recent Canada Life data shows unsecured debt consolidation accounted for 16% of all equity release applications in 2022, remaining within the top five most popular uses for a later life lending scheme, as demand for financial support options has grown.

Sadly, falling into debt is not always a lifestyle choice, but a necessity. This was the case for one of our clients over 55, who felt they had nowhere else to turn after falling into crippling debt.

The situation

Our client over 55, was a retired 62-year-old English teacher, who had fallen into debt to pay for hip surgery.

Having been faced with NHS waiting times of up to two years, our client opted to have the procedure done privately on her first hip. However, it came at a high price (the average price of private hip replacement surgery can be anywhere between £10,000 and £15,000), causing her to have to use her life savings and sell her car to cover the costs. Consequently, our client now found herself in serious debt — as well as in need of a second hip replacement, which she could no longer afford.

How 55Plus helped

After speaking with our team of expert later life specialists, we explored the financial options available to help our client settle her existing debt, as well as fund the necessary second hip replacement.

A 55Plus, we always take the time to meet with our clients over 55 to understand their unique situations first. This includes investigating which financial options are currently available and whether there is access to financial support by any other means. There is no fee for the initial consultation, and we always recommend that a trusted friend or family member is present at these meetings, to help with important decision-making and considerations. If we do not think Equity Release is suitable, we’ll say so.

In this case, our client was interested in releasing £20,000 from her property. This would cover the costs of her second surgery and mitigate the outstanding debt from her previous procedure. Having concluded that a lifetime mortgage was the best option for her circumstances, we supported her throughout the process and submitted an application on her behalf to our wide network of trusted, national lenders.

The outcome

Once the necessary paperwork had been reviewed, our client was successful in her equity release application and obtained a lifetime mortgage for the £20,000 requested. This granted her the finance she needed to consolidate her debt, as well as pay for the second hip surgery that she urgently needed. Furthermore, this gave our client peace of mind and a restored quality of life, without anxiety from increasing interest costs from her previous hip surgery payments.

With a lifetime mortgage scheme, our client could also have the confidence that she will be able to remain in her own home, with the option to only repay the loan from the eventual sale of the property.

Helping homeowners over 55 find innovative and intelligent solutions that support them through later life challenges is a cornerstone of our service. Equity release schemes can be used to help in the repayment of unsecured debt, such as personal loans, overdrafts, utility bills, medical bills, mortgages, or credit cards.

Consolidating debt is not always the right thing to do as this can extend the term of the debt meaning you pay more in the longer term, as such we always consider alternatives before advising on Equity Release. For example it may be appropriate to seek advice from specialist debt charities.

As leading and independent experts, we can access the entire market of equity release lenders, providing freedom and choice to find a later life lending scheme that works for your unique circumstances. If we do not think equity release is suitable, we will always say so and support you in exploring alternative options first.

Get in touch today for an initial, no-obligation consultation and find out whether equity release is right for you – in person or by phone or video.