Equity Release to pay cards

gm49

Hello -- hope someone can help me.

In a nutshell:
I'm 63, my wife is 56
We owe £20,000 on credit cards (don't ask)
Property valued at £200,000 - no mortgage.

The plan was to take out a lifetime mortgage to clear the cards, but this failed because the lender (Aviva) refused on the grounds that part of the property is of non-standard construction (timber-framed section, including kitchen & bathroom).

We are both presently on low incomes. My wife is too young for home reversion, even if we wanted it. The Agent says we won't get anywhere with this problem.

Is there any way of releasing equity to clear the debt?

Thanks in advance.

withabix

If you clear the debt, are you likely to build it up again?

Can either of you get a standard mortgage - are you working?

Could you sell and downsize, releasing equity that way?

What is the issue with the timber frame construction? Was it not done properly, is it just a wooden lean-to or is it of a type that has been known to be a problem?

Have you tried a broker to see if there are any other lenders?

fto

My advice would be to think long and hard, before doing this.
You are not clearing the debt & if you do not change your spending habits,you may build up the credit cards again.

gm49

Thanks to you both.

The debt would not be built up again. It's not really a result of bad spending habits, rather the urgent need for immediate cash with the expectation of getting a lifetime mortgage. It was a huge shock to us not to get it.
We are both working, but we believe our earnings are too low for a mortgage. We will investigate this.
Selling & downsizing is not possible.

The issue with the construction is that it's basically a wooden lean-to, and would need (at least) a new skin of brick or block around the outside, to form a cavity.

The Broker's Agent who dealt with us was extremely upset at Aviva's decision, and spent a week researching other possibilities for us, without success. We'll ask another broker.

Thanks again for your replies.

jonesMUFCforever

You are planning to make unsecured credit secured- which if you fail to repay could lead to you losing your home.
Think very carefully before proceeding.

fto

Try posting on the debt forum or try http://www.stepchange.org/

gm49

"You are planning to make unsecured credit secured- which if you fail to repay could lead to you losing your home.
Think very carefully before proceeding."

There would have been no repayments with a lifetime mortgage...
and we will think VERY carefully!

Thanks.

jonesMUFCforever

Don't be so patronising - there is nothing for nothing - a £20k debt now with a lifetime mortgage will be what in 20 years time?
Fine if you pop your clogs first but what will your wife have left? (Or vice verse)?

Tixy

A roll up lifetime mortgage of £20k would very likely use all up almost up the majority of the equity in your home. E.g. it would amount to £180k in 32 years (based on aviva's representative APR).

As that now doesn't appear to be an option to you anyway, have you considered defaulting on your unsecured debts and just paying back a reduced amount each month at a rate you can afford on your current incomes. Whilst it would massively affect your credit rating for the next few years, from what you have posted it doesn't sound like you have a need/intention for future credit. I would suggest contacting one of the debt advice charities for some advice on your options.