Retirees using equity release to pay debts of up to £28,000
Westcountry residents are facing retirement with debts of more than £28,000, a leading debt charity has claimed.
The Consumer Credit Counselling Service (CCCS) has said it received 634 calls last year from desperate over-55s in Devon and Cornwall.
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Those seeking financial advice from the charity owe an average £28,242 on credit cards, loans and other unsecured debts.
CCCS believes recent rises in gas and electricity bills have left older people struggling.
"Our clients have seen a 10.6 per cent increase, on average, in combined gas and electricity bills since 2008," says Matt Hartley. "This squeeze on household budgets is making it even harder for older debtors to repay what they owe."
Rachel Johnstone, from Age UK Devon, recognised the difficulties highlighted by the CCCS. "We know that rising living costs are causing significant hardship for older people, with nearly half saying they are just "getting by" and one in ten admitting they are finding it difficult or really struggling," she said.
To ease the pressure, retired homeowners are turning to the equity on their homes, says the CCCS. In the last year, £29,983 of capital was released from homes by the CSSS's free equity release advice service. The charity expects to see a rise in the number of homeowners turning to equity as a debt solution in the coming months.
"Equity release can be a good solution for some retirees looking to deal with problem debts, but it should only be considered as part of a long-term retirement plan," says CCCS equity release manager Tom Moloney.
The highest localised debt figures for over-55s came from Torquay, where those contacting CCCS owed an average of £31,057.
Age UK in Torbay, which serves the Torquay area, confirmed it had noticed an increase in older people turning to them for advice with crippling debt. The charity will intervene on the client's behalf when faced with small debts, but debts as high as those claimed by the CCCS would be referred to the Citizen's Advice Bureau.
The situation for the struggling age group is only set to worsen as winter approaches and there is a greater need for heating in the home.
According to Ms Johnstone, "many pensioners are facing the prospect of cutting back on their heating over the winter months just to make ends meet". "However, as much as £5.4 billion in pensioner benefits goes unclaimed each year, often because people are unaware of the help that is available."
Those over 60 can receive vital financial help towards heating costs through the winter fuel payment. The annual payment of at least £200 is supplemented by an extra £25 per week when the average temperature is 0C or below for seven consecutive days.
This could prove a lifeline to those living in rural areas if the harsh winter conditions of last year are repeated.
Temperatures plummeted as low as -7 in towns and villages across Devon and Cornwall last winter.
10 Comments
by MrsDixon22
Friday, September 23 2011, 9:49PM
“BTW Jason/Mary, hope the male to female op didn't hurt too much (well actually I don't, to be honest (sorry)).”
by MrsDixon22
Friday, September 23 2011, 9:24PM
“by MaryHolmes
Friday, September 23 2011, 3:15PM
."2ladybugs you are wrong with "nothing is free" Actually breathing air is free, speaking you`re mind is free, walking on the beach is free and schooling when i was younger was free. So you are wrong clearly."
Nothing gets past Jason.
I'm actually fairly impressed that he seems to be running his posts through a spell checker of late, small problem inasmuch as they don't pick up on mistakes such as the ones he's made here, or indeed, gibberish.”
by cherrie54
Friday, September 23 2011, 4:50PM
“Maryholmes This pensioner won't be having any money to leave behind and I'm not alone.People like me spent their saving while looking after relatives saving the state billions.Unlike the young of today we didn't have benifits to fall back on we don't get family credits/tax credits/full housing benifit/child allowance the list goes on. John norfolk and ladybug pensioners very rarely go into debt on their own behalf unless to keep up with consumer bills.Most debt other than on this is because the pensioner has a son or daughter who rather than fend for them selves go running to the pensioner parent to help them out financually. The young allways think pensioners are more better off that pensioners don't have bills to pay well wrong most do they spend more of their income on consumers bills for a start. Pensioners have to pay for care the same as parents do for child care. The son and daughter have allways got something to do when their pensioner parent needs help but not when it comes to a hand out.”
by 2ladybugs
Friday, September 23 2011, 3:21PM
“@MaryHolmes
Taken out of context I agree you are right. I should have said material things.”
by MaryHolmes
Friday, September 23 2011, 3:15PM
“2ladybugs you are wrong with "nothing is free" Actually breathing air is free, speaking you`re mind is free, walking on the beach is free and schooling when i was younger was free. So you are wrong clearly.”
by 2ladybugs
Friday, September 23 2011, 2:40PM
“It doesn't matter whether you are young or old. What you take with one hand you need to pay back with the other. Nothing is for free. This bad habit of borrowing for items that are very rarely necessary has got out of hand. Save first for what you need.”
by JohnNorfolk
Friday, September 23 2011, 1:34PM
“I believe the damage has been done by consumers taking advantage of the largessse of the building societies and banks to increase their borrowings for purposes other than the roof over their heads.
A few years ago daytime TV regularly featured advertisements offering credit to homeowners to cover cars and holidays.
The folks who borrowed that money now have to face repayments at a time in their lives when incomes are under strain by a combination of reduced retirement income and inflation.”
by MaryHolmes
Friday, September 23 2011, 1:21PM
“Give over. Pensioner always have money stashed away. Ask there next of kins who get it all.
Pensioner are world famous for moaning, saving and maoning some more.”
by conkerhead
Friday, September 23 2011, 11:03AM
“How much are these people spending in pound shops.”
by sparro
Friday, September 23 2011, 10:02AM
“The £25 low tempreture payment is not available to all pensioner. Those that have saved & got private pensions, do NOT get it. The above is not very clear, makes it look like all pensioners get the extra.”