Equity release helps pensioners with their debts
A new report announced by Age UK has found that a number of British pensioners are selling their homes for equity release and using the profits to pay off their debts and fund a high quality of life during retirement.
The report, entitled ’Housing and Finance in Later Life’comprises of research carried out by Birmingham University. The equity release scheme means homeowners are able to profit from the value of their homes by entering into a long term contract. Equity release became popular during the housing boom era, when property values soared, however more recent falls in house prices have been challenging for this industry.
Recent figures from the Bank of England show that British homeowners managed to increase their property value by over £22 billion last year. The scheme has also become increasingly popular among pensioners, whose profits have made a significant contribution to their pension funds. Chairman of the equity release trade body, SHIP, Laura Edmans, said that feedback from customers of equity release indicated a strong level of satisfaction for the scheme. Over the years SHIP have been campaigning to introduce special safeguards to improve the financial prospects for equity release customers. This includes a ’no-negative’equity guarantee, which aims to help customers access their property’s equity more confidently, as in the past this has often been a dangerous industry riddled with hazardous risks.
Age UK charity director Mitchelle Mitchell also said that equity release helped relieve financial strains later in life but warned anyone considering the scheme to seek appropriate financial advice from an independent organisation before entering a contract.
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