A third to use equity release

29 September 2011

A new poll has found that older people are set to rely on their homes for income in the future.

Equity release can be a good choice for those who do not want to leave their house but are short of money for their later years and according to new research it is being considered by around a third of those who are over the age of 50.

A poll by LV= found 36 per cent of people over 50 are going to have to delay their retirement as they cannot afford to give up work at the age they initially planned to.

Vanessa Owen, LV= head of equity release, pointed out that the UK's economic future is uncertain at the moment, which could lead to individuals assessing their financial options.

Inflation

Inflation was cited as one factor by the specialist, with this figure rising close to four per cent in the last few months, way above the target of two per cent.

Low interest rates are also causing issues for those who are relying on their savings, with the Bank of England's Monetary Policy Committee appearing unwilling to up the base rate from 0.5 per cent - which is a record low for the UK - in order to protect the economic recovery.

A third of those questioned by LV= for the research stated they would welcome a rise in interest rates, but 27 per cent disagreed, perhaps as they are still paying off their mortgage.

Vulnerable

Ms Owen said: "It is understandable that those approaching retirement are feeling vulnerable.

"Combined with the fact that for many, their home is their biggest asset, releasing equity from a property is an option that an increasing number of over-50s are now considering."

She added that equity release should be a "prime consideration" for those who are wondering how they are going to cope when they are in their retirement.

"The equity release market has changed radically in recent years, with new types of products entering the market offering greater flexibility and transparency," Ms Owen continued.

Alan Smith, chief executive at Capital Assessment Management, advised those coming up to their retirement to allocate some of their savings to investments that have the potential to grow over the years.

Older homeowners could use the equity release calculator from Key in order to see how much money they are able to free up from the value of their home.

Posted by Richard Planner