Equity release plans were introduced back in 1965. They have undergone many transformations in the following years and due to the recent changes in UK pensions, giving pensioners more freedom in retirement, sales of equity release plans have increased.navigate here
Retirees in the UK are now viewing their home as part of their retirement portfolio and are releasing the money tied up in the asset to fund their lifestyles.
Sales of Equity Release plans rose to 23,747 last year, an 11% increase on the previous year and with house prices at a high, many are seeing the advantage of tapping into one of their most valuable assets.
Why Do People Join An Equity Release Plan?
There are many reasons as to why people join equity release schemes: The most popular reason last year was to fund home/garden improvements, followd by those looking to fund a holiday as the second most popular reason and paying off loan debts and credit cards as third.
Who Can Join an Equity Release Plan?
The majority of equity release schemes are only open to those over the age of 55 (althought there are some open to those under the threshold). Generally the younger you are the less likely you are to be offered a good value loan.
What are the Different Types of Equity Release Plans?
The most popular equity release plans last year were drawdown plan which made up around 67% of equity release sales. A drawdown plan allows retirees to withdraw money in parts, as and when they need as opposed to one sum. This type of plan is preferred as interest is only payable on the money taken. This helps to dramatically reduce overall costs.
Why Has There Been a Change in Attitude?
It used to be the case that people would leave their homes to their children as part of their inheritence. However in the modern day younger generations are not expecting this as much. Instead, some would prefer their parents ‘kept’ their homes to fund their retirement and to make it more comfortable – particularly as the length or retirement becomes longer and the health of retirees improves meaning they can enjoy reitrement much more.
What Do You Need to Consider?
Releasing equity from a property is not a decision to be taken lightly. The schemes are designed to be a lifetime committment so if for any reason you decide to move you could find yoursef restricted. In order to determine whether this decision is right for your circumstances you should speak to a trained financial adviser who will be able to assess your needs and provide you with options in retirement, such as selling and downsizing.Is Equity Release Right for You