Indebted Retirement for Many As Liabilities Continue

Posted by Tom Magor in Personal Finance on 12 December 2016 - Tom is a Senior Credit Analyst at checkmyfile.

While their working days may have come to an end, financial commitments look set to continue for a greater proportion of retirees than ever before.

A study conducted by More 2 Life has discovered that 40% of those aged over 55 will still have a mortgage and an overdraft as they enter retirement, with a quarter anticipating that they will still have outstanding credit card debt. This is a considerable increase compared to last year when only 31% expected to have financial liabilities when they retired.

Changes to the way in which retirees can access their pension funds may be a key contributing factor. With equity release schemes becoming increasingly widely utilised, many consumers may have the intention of clearing their debt using such schemes soon after retirement.

Dave Harris of More 2 Life says, “These figures make for very interesting reading, as we look to understand the borrowing behaviour of the over 55s. Unsurprisingly, the over 55s want to be debt free as they enter their retirement years. However, whilst money is being drawn out under pension freedoms, it is not being used to pay down existing debts to any great extent, but rather to replace new, short-term borrowing.”

Harris also says, “These findings highlight the fact that many over 55s are taking out credit via loans or credit cards as they enter retirement, some with interest rates as high as 19% APR. These borrowers may not be aware of the benefits and competitive rates that are now available from equity release lenders. Rates have been declining in the equity release sector and are on average around 4.5%, considerably less than rates on loans and credit cards.

“Some consumers may also be unaware that there are plans available on the market now offering the ability to repay some of the original capital each year without penalties, as well as ‘interest served’ plans also being available. This provides even greater flexibility to those who need to borrow in retirement but want to mitigate the cost of that borrowing to keep it as low as possible.

“Our research also shows that many people have begun dipping into their retirement pots to replace short-term credit facilities for spending. Many of these individuals will have an ace up their sleeve, however, which will be their property wealth. It’s therefore crucial that retirees are made aware of how they can access the funds, safely and easily.”

Check Your Multi-Agency Credit Report

30 Day Free Trial

Why Don’t Millennials Take Out Credit?

As a millennial, it can feel like my generation is besieged with criticisms on a daily basis, and not all of them are entirely fair (though lots are). We are frequently told that as a generation we are entitled, we have it so much easier than our elders and arguably, worst of all: we buy too many avocados. While I don’t buy avocados, I do have access to credit, which makes me a minority among my age group.

Published on 16 May 2018 by Beth Jennings

Full Article

Why Is My Loan Balance Wrong On My Credit Report?

One of the single most important pieces of information to appear on your credit file is the information relating to your credit agreements and how you repay them - with this information lenders can see your borrowing history across the last six years and use it to help them decide whether or not to offer you finance.

Published on 7 May 2018 by George Coburn

Full Article

How long do closed accounts appear on my credit report?

Some people believe that as soon as a credit agreement is settled and closed, it will no longer be reported to the UK’s Credit Reference Agencies and therefore will no longer have an influence on future credit applications. However, this is a popular misconception, one that could affect your ability to get credit if not correctly understood.

Published on 2 May 2018 by Tom Magor

Full Article

How to Save Big in the Bank Holiday Sales

Bank holidays may not guarantee a day of sun-soaked fun, but as is British tradition, we’d probably be quite happy barbecuing in the snow if it came to it. But no matter what your plans are, if you want to grab a bargain, you can use the Bank Holiday sales to save some serious money.

Published on 26 Apr 2018 by Kiah Phillips

Full Article

Should I Buy or Finance an Aston Martin Valkyrie?

We’ve all been there. £3 million burning a hole in your pocket and a track-going version of Aston Martin’s latest hypercar sat in front of you. But as a shrewd, savvy business-type, you know that dropping £3m in one go on a 1,100bhp car could be considered a questionable, perhaps even ‘baller’ move. But what about putting it on finance?

Published on 13 Apr 2018 by Jamie Mackenzie Smith

Full Article

How to Build Credit History Without a Credit Card

When it comes to the best way to build up a credit history, conventional wisdom is to take out a credit card and use it for everyday purchases, while paying it off (on time) at the end of every month. There’s plenty to support this advice too, as a credit card allows you to spend as much or as little as your limit will allow, while building a history in a reasonably short amount of time.

Published on 26 Mar 2018 by Jamie Mackenzie Smith

Full Article

Which Credit Report Information Can Landlords See

Whenever you rent a property, you will be required to pass some checks set by the landlord or letting agent to prove that you will be a good tenant and that you’ll be able to afford to rent the property.

Published on 19 Mar 2018 by Kevin Pearce

Full Article

Do Student Loans Affect My Ability to Get Credit?

For many people, a student loan is the single largest chunk of borrowing they ever take out, second only to a mortgage. With course fees alone now coming to more than £9,000 per year and then the added maintenance loan on top of it, you can easily end up borrowing £40,000 during your studies.

Published on 8 Mar 2018 by Jamie Mackenzie Smith

Full Article

How Far Back Can I get my Credit History?

For your recent payment history information, your credit file has everything you need; that’s why it’s given so much importance by lenders whenever you apply for credit. But if you’re looking for information that’s six years old or more, it’s probably not be the best place to start.

Published on 7 Mar 2018 by Jamie Mackenzie Smith

Full Article

Are Car Insurance Premiums Calculated Fairly?

Recently news stories have emerged alleging that a “John” might be more likely to get a cheaper car insurance quote than a “Mohammed”, and that someone with a Gmail account could be offered a lower premium than someone with a Hotmail email address.

Published on 12 Feb 2018 by Jamie Mackenzie Smith

Full Article
keyboard_arrow_left

keyboard_arrow_right

We have loads of great customer reviews