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Retiring with outstanding debts has become the norm for a growing proportion of the UK public. Recent figures published by More2Life suggest that the total combined debt owed by over 55s will increase this year to £236 billion from last year’s £226 billion.
The financial implications of the COVID-19 crisis are expected to be felt for some time, potentially affecting thousands of retirees with outstanding debts. While the goal should always be to pay off as many debts as possible in the run-up to retirement, there are still options available for those with outstanding debts after they retire. A company such as Bridgingloans.co.uk could help find you the most suitable product.
Mortgage Options
For those who have not yet fully repaid their home loans, consulting with an independent broker comes highly recommended. There may be options available for switching to more competitive deals or perhaps even increasing the size of the mortgage in question, to enable other debts to be repaid and reduce total monthly outgoings. With introductory rates for new customers currently hovering at around 1% or less, now could be the time to consider switching to a more affordable deal.
0% Initial Credit Card Offers
Another option to consider is that of a 0% credit card balance transfer offer; this is where new customers are provided with an introductory period of usually six months to two years, where no interest is payable on balances transferred to the card in question. While this may not reduce the person’s total outstanding debt as such, it can reduce the amount they pay in interest and subsequently reduce total monthly outgoings.
Personal Loans
The same can also be said for some personal loans, which are currently being offered at record-low rates of interest; sometimes with a 0% introductory period. Such products can be used to at least buy some time and reduce cumulative interest debt, while further steps are taken to repay outstanding debts.
Consolidation Loans
One of the most flexible and accessible options is a specialist consolidation loan. A consolidation loan can be taken out for a sum much higher than a typical personal loan, enabling a variety of debts to be consolidated into one competitive loan. This subsequently means one monthly payment and one low-interest rate, adding up to significant savings when compared to multiple debts with higher rates of interest.
Specialist Secured Loans
There are also various types of specialist secured loans available from lenders on and off the High Street. Secured loans or bridging loans are issued against the home of the applicant, in a similar way to a conventional mortgage. A secured loan can often attach more competitive borrowing costs than a personal loan, and is a facility open to those with a poor credit history and/or no formal proof of income.
Equity Release
An increasingly popular option among retirees is equity release. This is a scheme that enables homeowners to tap into some or all of the capital they have tied up in their home, which can be released as a tax-free lump-sum cash payment. Doing so could enable multiple outstanding debts to be repaid, while enabling the borrower to continue living in their home with no monthly repayments for the rest of their life. Equity release is not for everyone and should only be considered under the advice of an experienced independent broker.
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