KRS outlines extent of pensioner debt

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The average pensioner with debt taking out an equity release plan on the value of their home has debts totalling £25,418.

This is one of the key findings in new research from independent equity release adviser Key Retirement Solutions says.

Furthermore, maximum credit card debts are as high as £90,000 with some pensioners clearing £250,000 unsecured loans and others struggling with £340,000 mortgages.

Key Retirement Solutions’ analysis of more than 4,400 customers in 2010 shows one in three had debts run up from credit cards, loans or mortgages with many struggling with multiple debts.

Figures for the first quarter of 2011 show 31% of customers used some or all of the cash they raised from equity release to clear their debts compared with 23% for the last three months of 2010.

In 2010 pensioners with debts were putting £385 a month towards repayments. On an average pensioner household income of £17,727 before tax, amounting to 26% of income going on debt repayments.

The average owed on a mortgage is £30,838 while average credit card debts were £10,296 and average outstanding loans were £11,386, Key Retirement’s data shows.

Dean Mirfin , group director at Key Retirement Solutions, said: “Pensioners in line with the rest of the country have struggled to borrow money in the past three years and have increasingly turned to credit cards to tide them over.

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