Equity Release Schemes and Reverse Mortgages Offer Cash To Pensioners
Posted on May 11, 2009 in the Mortgages category
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Our ageing population are under pressure to survive financially. They are reliant on their investments to help afford a comfortable old age. However, reduced interest rates have left them with far less than anticipated.
For those approaching retirement, its seems like that their current pension schemes will have lost large sums on the stock markets, therefore their value is much less than predicted and pensioners need alternative sources of funds.
Financial security in retirement isn’t as certain as once thought. The escalating prices of utilies and groceries, coupled with the falling values of share based investments is making it more difficult for pensioners to meet their daily living costs. Having saved all their lives towards their pension fund, the comfortable lifestyle they were expecting is out of reach.
The key to making they right decision regarding Equity Release Schemes is research and good advice. Equity release schemes can help provide for retirement but aren’t suitable for everyone.
Equity release allows you to only make use of a small percentage of the value of the property 35% -55%. The amount depends on variables like age, health and house value. Be careful if you are on means tested benefits or if you receive help to pay for your care, Equity release may remove your eligibility
You should always use an Equity Release Plan containing a negative equity guarantee. This means even if the value of the house drops significantly you will never owe more than your house is worth. Use a provider who is a member of SHIP (Safe Home Income Providers) and well known or recommended.
When considering Equity Release Mortgages make sure you are aware of all the charges involved and check for early redemption penalties should you wish to exit the product as you never know when your circumstances will change.
Equity Schemes should not be confused with Sale and Rent Back, they are completely different products. Sale and Leaseback is not regulated by the Financial Services Authority.
It is a good idea to access independant legal advice before signing up. Getting all the fact to make an infomed decision is key as Equity Release can be very complicated
Yes, Equity Release Schemes are a good idea and they can deliver but it is important that you research them fully. Find a specialist advisor who has regular dealings in this market and knows all the current facts and regulatory information.
We would expect to see a increase in the amount of people chosing to add equity release into their retirement planning.
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