Debt Consolidation Using Equity Release Schemes

Many a time, people get to their retirement age straddled by debts stretching from loans, credit cards and other regular financial commitments. It is always distressing because this is a time when you fear these debts will eat into your pension and you will have less income to meet these liabilities. After retirement, the best thing you can do is to relax and enjoy life without any financial stress because life already may have been hard work in even reaching retirement age, so the last thing you wish for is the stress to continue. You have options like debt consolidation and equity release schemes.

If by chance you happen to be crushed by bad debts, the good news is that there are debt consolidation options from a number of sources. You can consider equity release schemes which enable you to enjoy a life without financial worries & further monthly repayments. Having attained a minimum age of 55 years and above and owning a valuable property, you can use the option of taking out an equity release plan to secure finance in order to repay these debts once and for all. Whatever plan you choose, you must ensure that you do it carefully because of the different characteristics that they exhibit.

Acquiring funding through equity release can be a great way to relieve you of your debts because the same loan will be used to offset other outstanding credit cards etc. If your home is highly valued, there is no doubt you may still have more money left to spend into your retirement without worrying about losing pension. It all depends on how much equity you can release. This will depend on your age at the time and the surveyors report on the condition and value of the property.

Unless your debt is too high, the amount taken as lump sum will be enough to alleviate your financial woes. There are repercussions however; your inheritance plans will be hampered unless you have other plans to settle beneficiaries in other ways. The home equity loan plan is only suited for persons who possess their own property and they may use the money to develop the other assets for their own benefit.

Equity release is not the only way to debt consolidation. There are other ways which are applicable for example persons who are far away from attaining the age of securing an equity release. Financial advisors are available to give relevant advice based on income and the nature of debts owed. They will always come up with a financial solution tailored to your particular situation, needs and wants.

Loans can be attained that you make monthly payments on. These loans may not have collateral, but they will definitely use your pension. If you do not have enough pension to pay your daily living then something like a personal consolidation loan is going to create more problems than they solve.

As you consider the variety of options open to you, consider what is best. Speak with your family. Your family should be a part of a major financial decision that could affect them after you pass on or move to a retirement home. At the very least your family might lose their inheritance if you make the wrong choice. If you do not ensure there is some protection they may be responsible for your debt.

Lifetime mortgage schemes can come with a negative equity clause. This clause protects your family from owing money if the home value is lower than the amount you owe on the loan. It might not save the inheritance, but it does save from more burdens.

Home reversion is another choice. Home reversion is the sale of your home. With that money you could pay off your debts. You might not own your home anymore, but you also do not need debt consolidation. You are paying off the debts you have by the money you receive. This only works if you have enough value in your home to live on and pay off the debts.

Make certain you speak with a financial adviser before you make the ultimate decision on what you wish to do for your debts. An expert in financial markets should have an understanding of equity releases and debt consolidation. They should be able to help you understand some of the benefits and disadvantages you might face. You certainly do not want to end up owing more as you are about to enter a retirement home. The only option at this point would be a life insurance policy that can pay the debt after you are gone.

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