Helping older borrowers consolidate their finances after COVID


Paul Adams is Sales Director at Pepper Money

Much has been said about the impact COVID-19 will have on the finances of younger generations, who will eventually repay the vast amount of government borrowing created by the pandemic for decades to come. This is undoubtedly true, and the economic fallout will leave its mark on the workforce and the mortgage market for many years to come, presenting new considerations and opportunities for advisors. But what about borrowers at the opposite of their careers?

A recent study by stock release adviser Key, who surveyed people who intended to retire in 2020 and 2021, found that one in three people were retiring in debt this year with an average of £ 20,650 to reimburse. Additionally, the study found that people who plan to retire this year face approximately one-fifth more debt than those who finished their job last year.

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The most recent Pepper Money Adverse Credit study found that almost a quarter of all people aged 55 and over (24%) said their amount of unpaid debt has increased in the past year. due to COVID-19.

So it’s clear that the pandemic has negatively impacted the finances of many older people as well as those looking to take their first steps on the housing ladder, and this presents an opportunity for you to help.

Unlike younger borrowers, one of the advantages of older clients is that they often have a significant amount of equity in their property, which opens up several options. Freeing up equity is one path, of course, but it’s not for everyone, and there are other ways to help secure the finances of clients approaching retirement. Sometimes debt consolidation can be a good option for clients, for example.

At Pepper Money, we allow capital raising up to a maximum loan-to-value ratio (LTV) for debt consolidation, with loans up to 75 years old, and this has proven to be a growing combination of criteria. most popular. Additionally, to help borrowers looking to write off existing debt while still staying in their current property, we are now offering repayment options on certain mortgages and have reduced our appraisal fees on properties valued below. £ 200,000.

Another option is downsizing, which can offer clients a way to crystallize the increase in equity they have enjoyed on their property without increasing their borrowing.

The possibility of borrowing on the basis of interest only can prove to be an important tool in downsizing, especially as we accept the sale of the main residence as a repayment without a minimum equity requirement and strategy. plausible reduction. Interest only options are available in our range up to 60% LTV.

The reality is that COVID-19 has impacted the finances of every age group and demographic in one way or another. The good news is that advisors have access to many solutions to help their clients secure their finances, regardless of their age.

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