Equity release to help people falling behind on bills

Households struggling to pay necessary bills 

Bills. None of us like them, but unfortunately they’re unavoidable. Mortgage payments, water, electricity, gas, broadband, food… the list of essentials for any household soon adds up – as do the associated bills. With the ramifications of the coronavirus crisis still being played out, the latest evidence shows that many UK households are now struggling to cope with their basic bills. 

Research from Citizens Advice has found that six million Britons are currently behind on household bills. The report also devastatingly highlighted that those with caring responsibilities and those who have to shield themselves were much more likely to be behind on their bills than those without such responsibilities and those who don’t fall into a ​‘vulnerable persons’ category. 

The organisation also found that key workers – who have played an essential role in the UK’s effort to combat the virus throughout the pandemic – were three times more likely to be struggling to meet everyday expenses than people employed in other industries. 21% of key workers were unable to pay some or all of their bills, compared to only 7% of non-key workers. 

Similarly a report by the Institute for Fiscal Studies has found that non-payment of household bills increased sharply just after lockdown, with further increases between April and May. The number of households making mortgage payments was 14% down on pre-crisis trends, while those making council tax payments was down 9%. 

The report’s authors conclude that the further deterioration in the proportion of households making regular payments may suggest ​“that some households are increasingly struggling to make ends meet as the crisis persists.”

Regrettably, the financial impact of coronavirus has left many people feeling more stressed according to analysis by the Office for National Statistics (ONS), which has found that those financially effected by coronavirus are 16% more anxious than those who have been unaffected.

Reasons why people are behind on bills 

While every household or person will have their own unique set of circumstances for not being able to pay their bills, here are a few common reasons: 

1. The furlough scheme: Although undoubtedly the furlough scheme — and from November, the job support scheme — have been lifesavers to many businesses and people in industries that have suffered during the pandemic, the schemes have still meant reduced incomes for most.
2. Unemployment: Unfortunately, furlough did not save every job, and unemployment has risen 0.3 percentage points on the same period last year. 
3. Business uncertainty: With supply chains and demand shifting overnight, it’s been a challenging time for business owners. The ONS found that the self-employed have been the most adversely affected by the coronavirus, with their income taking a hit in line with a general decline in business. 
4. Mortgage holidays: Many people took advantage of the mortgage holidays on offer. While this may have been an invaluable lifeline, it is still additional debt that will need to be paid off in the long term. 

Could equity release help you get back on top of your bills? 

For many people, falling behind on basic bills is scary. Releasing equity on your property is one solution that could help your family, including: 

• Relieving you or your partner of pressure: Within many couples, one job has been affected much more severely than the other, leaving the other person feeling more pressure to provide financially for the household. Equity release could unlock enough cash to compensate for a reduced income from you, your partner, or both of you. 
• Protecting your family: With a greater cash reserve, you won’t have to worry about the gas being turned off or being left without WiFi in the house. 
• Peace of mind: As research has demonstrated, falling behind on bills can create anxiety. If you want to feel more in control of your financial situation, releasing equity could be an option to consider. 

• Helping loved ones who are struggling: Even if you’ve been lucky enough not to be affected financially by the coronavirus pandemic, you may have loved ones who have not been so fortunate. Releasing equity from your home could help them out in their time of need, and with increasingly flexible features, such as the ability to repay some loans early without penalties, there may be a product to match both their immediate and longer-term financial needs.

Getting advice from an expert adviser 

Founder and Managing Director of 55Plus Release, Jan Johnson, commented: ​“It is disheartening to see so many families falling behind on their bills, but it is definitely understandable during the current climate.

“If you’re considering releasing equity as a way to help pay your bills then it’s important you seek advice from a specialist who will talk your language and find solutions that meet your personal circumstances. All our advisers at 55Plus Equity Release are experts in their field and will make sure you have all the relevant information you need to reach a decision.”

Many families have been left in a financially uncertain situation because of the real repercussions of the coronavirus crisis. If you wish to discuss releasing equity with an expert, one of our advisers will always be more than happy to help.