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 thought.
There could be a financial shortfall ahead for those due to retire soon. Pension fund values have decreased during recent months due to the downturn of the economy. Prospective pensioners will need new avenues of funding to survive old age.
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.
Equity Release Mortgages can help release cash tied up in property. However they arent the solution for everyone. You may wish to consider all the information facts available and it is always strongly advised that you consult an Independent Financial Advisor before taking out an equity release mortgage.
The amount you can borrow through Lifetime Mortgages can vary depending on property value, age and health. Also you can generally only a release a small proportion of the value - 35% -55%. An important fact to consider is that releasing equity may affect your eligibility to means tested benefits and care funding.
It’s recommended that you use a SHIP (Safe Home Income Providers) member. They can give best advice. Also look for products 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.
When considering Equity Release Schemes 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.
You should always obtain independent legal advice before proceeding. Equity release can be intricate. 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.
Given the current market conditions, we would expect to see a healthy rise in the number of people incorporating equity release into their retirement planning.
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