Pressures are increasing on our retired population. They depend on their life savings to financially assist them with their day to day living expenses. With interest rates decrease the value of their savings is falling.
Pension schemes have lost valuerecently in the stock market fall thus decreasing their value on drawdown. This will leave people nearing retirement with a gap in their retirement funds and seeking another stream of income.
As Life long pension and investment values are falling pensioners are looking for new ways to fund their retirement. The rising prices of fuel and food are taking the toll on bank balances making it difficult to afford the lifestyle they have saved for.
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 Mortgage providers make decisions on the amount you can borrow via variables such are age, health and property value. There are a number of products available but most of them allow borrowing of around 35%-55%. If you are on means tested care funding or benefits check to see if your eligibility will be affected.
A negative equity guarantee is always a good idea with Equity release. This means even if the value of the house drops significantly you will never owe more than your house is worth. Use a lender who is a member of SHIP (Safe Home Income Providers) and well known or recommended.
Important factors to consider are charges when using Equity Release. Your personal circumstances could change and an early redemption penalty could effect an eventual outcome.
Sale and Rent Back schemes are sometimes confused with Equity Release. They are completely different and the former is not regulated by the Financial Services Authority.
You should always obtain independent legal advice before proceeding. Equity release can be complex. Make sure you have all the facts at hand to ensure you make an informed decision.
In summary Equity Release Schemes are a good idea and can work well. However you must do research and I suggest you find a qualified advisor specialising in this market. All up to date facts are essential.
We would expect to see a increase in the amount of people chosing to add equity release into their retirement planning.