Where debt is the reason equity release is being considered, the first step is free debt advice, which can include a check for benefits you may be entitled to and may lead to a repayment plan instead of borrowing. This sets out that route, and what genuinely changes when a debt you are repaying becomes one that compounds until the property is sold.
Free debt advice comes first, and not as a formality. An adviser can check whether you are missing benefits you could claim, which changes the sums before any borrowing is considered.
Equity release may involve a lifetime mortgage, secured against your property, or a home reversion plan. It will reduce the value of your estate and impact funding long-term care.
If debt is the reason equity release is being considered, the step before anything else is free debt advice. MoneyHelper, which is run by the Money and Pensions Service, describe it plainly: you can get free, confidential advice from a trained and experienced debt adviser, and debt advisers will listen, never judge and show you how to take the next steps.
They also set out what a debt adviser does, and one item on their list matters more than the rest for people of retirement age. A debt adviser can check to see if you are missing out on any benefits or entitlements you might be able to claim. Money you are already owed changes the arithmetic before any borrowing is considered, and it costs nothing to find out.
MoneyHelper note that if you need help sorting out your debts rather than a new loan, a debt adviser might be able to negotiate with your creditors and arrange a repayment plan, or a debt management plan. That is a different route entirely and it does not touch your home.
How equity release affects benefits →MoneyHelper warn that with a secured consolidation loan, if you miss repayments you could lose your home. A standard lifetime mortgage normally requires no monthly payment, so that particular mechanism does not apply.
Instead of a payment you might miss, you have a balance that grows until you die or move into long-term care, and it is repaid from the property. That is the trade, and it should be described to you in those terms.
How rolled-up interest works →A credit card balance you were clearing over four years does not disappear. It becomes borrowing that may run for twenty years or more, and interest is charged on it for all of them.
Paying interest, and why people do →An adviser has to consider whether other methods of raising funds are more suitable. If they conclude one is and you disagree, they must give you the basis of their advice in writing.
Six things that are not equity release →MoneyHelper set out when consolidating repayments makes sense. It is a useful list because it is a test rather than an opinion, and it is worth applying honestly rather than hopefully.
The affordability item is the one people misread. A standard lifetime mortgage has no monthly payment to keep up, so "can you afford the payments" appears to be satisfied automatically. It is not a test you have passed. It is a test that does not apply, because the cost has moved from your monthly budget to your estate.
The total payable item is the one to be hardest about. Interest on a lifetime mortgage is charged on the interest already added, so a debt cleared today can cost a multiple of itself by the time the property is sold. Ask for that figure in pounds over ten and twenty years before you decide anything, and compare it with what the original debt would have cost.
Voluntary payments are worth asking about for exactly this reason. Plans meeting the Equity Release Council standards must allow repayments to be made without a charge, and paying the interest each month keeps a rolled-up balance from growing.
Their warnings are about consolidation products generally, and they are worth carrying because the same sales patterns turn up in later-life lending.
Whether this is the right way to deal with your debts. That is advice about your finances and it needs somebody qualified. Free debt advice is the first call and it is not us.
Whether you would be accepted. Nobody can tell you that from a web page, and a site that implies it is one to be careful of.
Whether to use your home to clear a debt. That is a decision about your finances that needs regulated advice, and where debt is the reason, free debt advice comes before any of it. We are not advisers, we are not debt advisers, and nothing here is a recommendation to borrow or to wait.
Equity release requires repaying any existing mortgage. Money released, plus accrued interest, would need to be repaid upon death or moving into long-term care.
All of it is free, and all of it can change the answer.
Questions worth asking, in this order.
Am I missing any benefits or entitlements?
Ask a free debt adviser first. It is money you may already be owed and it changes everything downstream.
Could my creditors agree a plan instead?
MoneyHelper say an adviser may be able to negotiate one. It does not touch your home, so it is worth ruling in or out first.
What will this debt have cost me in ten and twenty years?
In pounds, not a rate. It is the only fair comparison with the debt you are replacing.
What alternatives did you consider, and why did you rule them out?
An adviser has to weigh other ways of raising funds. A clear answer names them.
Can I make voluntary payments, and what would they need to be to stop the balance growing?
Council standards require repayments to be allowed without a charge. The figure is worth having before you decide.
Short answers to the things that come up most. None of it is advice, and every figure on this page carries its source.
That is advice and nobody can give it to you from a web page. What we would say is that where debt is the reason, free debt advice comes first. MoneyHelper offer free, confidential advice from trained debt advisers, and they may be able to negotiate with your creditors or arrange a repayment plan instead, which does not involve your home at all.
Not through missed payments, because a standard lifetime mortgage normally requires no monthly payment. MoneyHelper's warning that you could lose your home applies to ordinary secured homeowner loans where payments must be kept up. The risk here is different rather than absent: the balance grows until you die or move into long-term care, and it is then repaid from the property.
It can, and often by a great deal, because interest is charged on the interest already added. A balance you were clearing over four years may become borrowing that runs for twenty. Ask any adviser to show you the cost in pounds at ten and twenty years and compare it with what the original debt would have cost you.
MoneyHelper, which is run by the Money and Pensions Service, publishes a Debt Advice Locator that shows debt advisers near you and lets you filter for online, telephone or face-to-face help. They say a debt adviser will listen, never judge, keep everything confidential, and check whether you are missing out on benefits or entitlements you could claim.
We cannot tell you whether any lender would accept you, and any site that implies it can is one to treat carefully. What we can say is that an existing mortgage or other borrowing secured on the property normally has to be repaid from the money released, which reduces what is left for anything else.
Equity release may involve a lifetime mortgage, secured against your property, or a home reversion plan. It will reduce the value of your estate and impact funding long-term care.
One qualified equity release adviser. They will go through your figures and tell you if there is a better answer. It costs nothing and commits you to nothing.
Google Analytics, Microsoft Clarity and Vimeo. Say no and none of them loads. What each one stores, and what Microsoft use theirs for.