Equity release on property is supposed to be the best plan for those who are left high and dry after professional retirement due to being extravagant in maintaining luxurious lifestyle throughout the years of professional life. With money encased from the release of equity on residential property, the retirees can drive the wheel of life at smooth pace even without having reliable source of income.

A few retirees think about alternatives to the release of equity on property to pay off their old debts. Debt consolidation is among the alternative option for them. By consolidating your debt, you can make a single monthly payment for several credit card or loan payments. The single monthly payment measures lower than the total value of the unpaid monthly payments. A debt consolidation loan may be secured or unsecured. Interest rates on unsecured loans are lower than those on the secured ones. Consolidating debt is no better option than releasing equity because of certain disadvantages that are as follows –

Remortgage your home to consolidate your debts is not something practical or profitable. It may worsen your financial situation at the post-retirement stage by extending the mortgage term. Remortgaging the house for debt consolidation will use up a part of the equity on the property that have been built over the years. Having no money in your hand or back account, it is not possible to make even a single monthly payment. You need to make careful selection of a lender for debt consolidation purpose.  It is difficult to get such a lender who thinks of not his gains but the interests of his clients.  

Owning to the above-mentioned disadvantages, debt consolidation as an alternative to equity release on property takes a backseat. Releasing equity is easier and more advantageous than debt consolidation. Pension release is supposed to be another considerable alternative to release of equity. The next blog will focus on whether it is right to go for a pension release scheme.