What Does the Future Hold for Equity Release Schemes? | Equity Review
Equity release provides a useful retirement mortgage vehicle for homeowners to raise money without having to sell their property. This financial product for the over 55’s has become increasingly popular in recent times due to three main reasons: –
• People are living longer today than ever before and as such need to plan for their retirement income over a longer period
• The costs of living are on the increase – petrol, food and commodities
• Property prices have risen over the years so that homeowners are likely to have a substantial amount of equity built into their home
Ever tightening public spending budgets and the rising costs of long term care during old age also mean that the differential between retirement income and retirement costs is on the rise. This situation calls for flexible and innovative retirement solutions for pensioners to optimise their life savings. Equity release provides such an option, and while it might not offer the right retirement solutions for some, it does work for as many others.
Statistics from the Equity Release Council also show that there is a rising demand for inventive tools for financial management during retirement and that equity release schemes are becoming increasingly popular. The main reason for this surge in popularity is perhaps the juxtaposition of various social factors as outlined above.
Another important reason for this is the fact that the equity release market has expanded to include a wider variety of products and schemes today than were available a few years back. The increasing popularity of drawdown lifetime mortgages is testimony to the fact that there is a genuine demand among people for flexible financial equity release schemes. This form of retirement mortgage can now take over from those now reaching retirement with a mortgage in tow. By remortgaging onto an interest only lifetime mortgage, you can transfer the debt onto a lifetime fixed rate with no concerns over ever having to pay it back…that is until you die or go into long term care!
While financial circumstances for the majority of pensioners play an important role in the rising popularity of these financial products, a changing social trend is also responsible. While it was once a taboo to even mention having, let alone have, a loan or unpaid retirement mortgage, attitudes towards saving, and inheritance are fast changing.
People want to enjoy their hard earned life savings in their old age. Changing attitudes towards ageing, and old age, as well as towards inheritance mean that people are more accepting of the notion of dipping into their savings pool or their property equity for an income boost during retirement.
Going by current statistics and trends, it seems that the future of equity release schemes is bright. With tighter regulation from the FSA and the newly rebranded Equity Release Council (formerly SHIP) confidence in lifetime mortgage schemes has virtually been restored.
Changing social attitudes and changing financial circumstances mean that equity release schemes are becoming increasingly popular and will continue to do so in the future. To check whether you would be eligible for a retirement mortgage call the specialists on freephone 0800 678 5159.