Those over 55 used home equity to write off more than Â£ 612million in unsecured debt in 2020, according to Key’s analysis.
About a fifth (18%) of the Â£ 3.4 billion in real estate wealth released last year has been used to write off unsecured debt.
Credit cards (Â£ 8,500), overdrafts (Â£ 2,000) and loan balances (Â£ 11,700) were the most common types of debt paid off on home equity.
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About 14% of customers had credit card balances, while 12% had loans to pay off and 6% needed to pay off auto financing.
Data also shows that customers with credit card debt were making monthly payments of around Â£ 292, while loan payments averaged Â£ 267 per month.
With a full state basic pension of Â£ 179.60 per week – or Â£ 9,339.20 per year – starting in April, those over 55 would lose more than 70% of their pension support. the state barely for minimum repayments.
Credit card repayments (Â£ 292 per month) would represent 37% of their annual income, while loan repayments (Â£ 267 per month) would represent 34% of their annual income.
Average credit card debt being discharged is as high as Â£ 20,300 in the South West of England, with London also experiencing higher debt at over Â£ 15,700.
Loan debts exceed Â£ 20,000 in London and over Â£ 15,000 in Scotland, while overdrafts are a major problem in Northern Ireland and the North East
Will Hale, Managing Director of Key, said: âUnsecured debt is a big problem for people of all ages and our data shows it affects people aged 70 to 80 as well as younger people. No one wants to go into debt in retirement, but sometimes it is inevitable.
âThe problem is that people on fixed incomes will have a hard time paying off their debts and often end up paying the minimum amount each month, which inevitably means that it takes longer to pay off the debt as interest increases.
âFor those heavily dependent on state pensions, losing 70% of that state support just by meeting these minimum repayments must be devastating.
âThose who are struggling with debt should seek support because there are options available. For some, this could mean refinancing debt using a more modern and flexible approach.
âEquity release plans that allow people to repay interest and principal are increasingly playing a major role and can help those in difficulty. “