Check If You Qualify

Can equity release help me to manage my debt problems?

Sharon McDougall - Updated - 1st May 2024 - 3 minutes to read

Statistics published by the Equity Release Council show a significant rise in the number of equity release transactions in Scotland in recent years. An increase of 62% between 2012/13 and 2017/18 could be due in part to the increased flexibility these products now offer, but does it also reflect a growing need to deal with serious debt?

Equity release is commonly used to clear debt and reduce financial pressure in retirement. It allows homeowners to release the value locked within what is likely to be their largest asset. So how does equity release work and could you use it to help with your debt problem?

How does a lifetime mortgage work?

Lifetime mortgages offer a cash lump sum, cash payments in instalments, or a combination of the two, and you remain the owner of your home. You can choose whether or not to pay interest on the mortgage, or allow it to accrue. If you’re the sole occupant and need to move into a care home at any point, the property is likely to be sold and the outstanding mortgage repaid from the proceeds. Similarly, the mortgage is repaid from your estate when you die.

Scotland Debt Calculator

Get a rough indication of what your repayments might be under each of our different debt solutions.

Your Total Debt

£0 - £5,000

£5,000 - £10,000

£10,000 - £20,000

£20,000+

Your Employment Status

I am employed

I am self-employed

I am unemployed

I am a student

I am retired

Your Total Monthly Income

£0 - £1,000

£1,000 - £2,000

£2,000 - £3,000

£3,000+

What can you pay monthly towards your debt?

£0 - £100

£100 - £200

£200 - £300

£300+

What is a home reversion plan?

Home reversion plans involve the sale of all or part of your property to a home reversion company. Again, you can receive a lump sum of cash or payments in instalments, and the firm receive their money back when the property is sold. You live in your home rent-free for life or until you move into full-time care, but lose sole ownership of the property. Equity release products regulated by the Equity Release Council operate on a no negative equity basis meaning that you, or your estate, will never be liable for more than the value of the property.

Are you eligible for equity release?

Eligibility criteria for equity release products vary between providers, but are typically:

  • Minimum age for taking out a lifetime mortgage: 55
  • Minimum age for home reversion: 65
  • Typical minimum property value for equity release: £70,000

The amount of equity you can release depends on your age, but as you get older you’re usually able to borrow more.

Paying off debt using equity release

Equity release can help with your debt problems, and you can use it in relation to any form and amount of debt. If you’re on a low income or have retired you may be struggling to pay off debt, and it’s natural to feel worried about the future. So why choose equity release to pay your debts? Making only the minimum payment on credit cards keeps the problem at bay for a short time, but eventually your debt will grow to the point where it’s unmanageable. Also, if creditors take legal action for non-payment you may be at risk of bankruptcy. Equity release makes use of your property’s inherent value without you having to move, but you do need to seek independent legal and financial advice before proceeding. This allows you to find out about any other options, and understand the full implications.

What are the advantages of using equity release for debt?

What are the potential disadvantages?

For more detailed information about using equity release to pay off debt, call one of our experts at Scotland Debt Solutions. We’ll assess all your options for paying down debt, and advise whether equity release is the best under your circumstances. A number of debt relief schemes also operate in Scotland, and it may be possible to repay in another way. Scotland Debt Solutions are debt specialists and will provide the reliable independent advice you need when considering equity release. We offer free initial consultations, and operate from a network of offices around Scotland.

facebook colour icon twitter colour icon linkedin colour icon messenger colour icon whatsapp colour icon email colour icon
Sharon McDougall Square

Sharon McDougall

Manager

Other Articles

Can I borrow money whilst I’m in a Trust Deed? Can I Borrow Money

Can I borrow money whilst I’m in a Trust Deed?

Borrowing money when you’re already deeply in debt requires careful consideration, and consultation with your trustee, as there are various factors associated with further borrowing in this situatio...

Your guide to getting a mortgage after a Trust Deed Guide to get a mortgage

Your guide to getting a mortgage after a Trust Deed

If you’re about to be discharged from a Trust Deed, you may be wondering to what extent your ability to obtain a mortgage has been affected.

What is an inhibition court order in Scotland? Court Order

What is an inhibition court order in Scotland?

If you’ve lost your job, state benefits and tax credits can provide vital financial support to see you through this tough time and help you avoid taking on too much debt while you look for more work...

About

Why Choose Us

Usp Discussion

Speak Direct With

A Qualified Adviser

Headset

We Don't Operate

Call Centres

Usp Location

5 Offices in Scotland

National Coverage

Usp House

Ask us About

Home Visits

Usp Award

Fully Regulated Advisors

From a Reputable Firm

Usp Hand Heart

Helping Scots Get

Out of Debt Since 1989

We'll give you a call

Our Scottish based team can help advise you on your debt problems.

Here at Scotland Debt Solutions we take your privacy seriously and will only use your personal information to contact you with regards to your enquiry. We will not use your information for marketing purposes. See our Privacy Policy.

Tools

Useful Tools

Personalised Debt Report
Usp Planner

Personalised Debt Report

Our personalised debt report will help you better understand your financial position and see where your money is going.

Debt Report
Instant Scheduled Call & WhatsApp
Headset

Instant Scheduled Call & WhatsApp

Arrange a call with an expert advisor at a time to suit you or contact our team via WhatsApp for immediate help and advice.

Arrange Callback
Find a Local Office
Usp Signpost

Find a Local Office

We have five offices located across Scotland. Find your nearest one here.

Find an Office

OUR SERVICES

We can help you with...

Sequestration

Sequestration

Sequestration is the Scottish version of bankruptcy and may be suitable for you if you do not have the money to pay back your debts

Find out More
Trust Deeds in Scotland

Trust Deeds in Scotland

A Trust Deed involves making a monthly contribution to your debts for up to four years. After this time any remaining debt included in the Trust Deed will not need to be paid.

Find out More
Debt Arrangement Scheme (DAS)

Debt Arrangement Scheme (DAS)

A Debt Arrangement Scheme (DAS) lets you pay off your debt through a series of manageable instalments over a reasonable length of time.

Find out More
Business Debts
Icon Briefcase

Business Debts

Whether you are a sole trader or a limited company director, we can help you work through your current financial problems including money owed to HMRC

Business Debts

Our Insolvency Practitioners are regulated by ICAS or the IPA and our firm is authorised and regulated by the Financial Conduct Authority

Fees and Information: There are fees associated with our services. These will be fully explained before entering into any of the personal debt solutions referred to on this website. Full details of our fees and how these are charged are fully explained to you prior to you committing to any particular service.

ICAS Insolvency Practitioners