Despite falling house prices, retired homeowners still have £611.5bn of equity in their property.

This statistic highlights how much equity there still remains in the retired persons property market.

The property markets contrasts with the current squeeze on retirement income seen in today’s volatile market and economic conditions where rates on annuities and income drawdown products are falling.

Recent research has also found that the value of property equity belonging to homeowners aged 65 and over fell by £80.6bn between October 2008 and January 2009, with the average homeowner over 65 seeing the value of equity they have in their home fall by £21,377.

London homeowners aged 65 and over saw the highest decline for any region in England and Wales with equity in their homes falling by £38,057 while those in Yorkshire and Humberside experienced a decrease in value of £13,028. Regions which saw below average falls included the South West, North East, Yorkshire & Humberside, West and East Midlands and the East.

Even in this depressed market, the vast majority of retired homeowners still have considerable wealth tied up in their properties. Equity release schemes can still assist even in the current market.

They will in many cases not want to move home and in the current market the option of downsizing and raising money is less attractive when prices are falling and houses take longer to sell. The emotional wrench of moving house may be worsened by the financial loss of having to cut your price in a slow market.

Equity release has an important role to play in providing retirement income particularly when other sources are under pressure. This can be via a single lump or drawdown equity release scheme.

For advice on equity release schemes contact http://www.equityreleasesupermarket.co.uk

As mortgages become harder to come by, the impact is being felt in the equity release market.

However, this form of releasing cash from your property is now benefiting from the mortgage downturn.

Equity release schemes are managing the various forms of borrowings in retirement & being used as the tools of choice to redeem outstanding debts.

More equity release customers are now unlocking cash from their homes in order to repay their existing mortgage. This has now become the main issue for people over 55 to take out equity release schemes.

These mortgage repayments have come about via the use of both lifetime mortgage & home reversion schemes.

The majority of equity release clients will be using a lifetime mortgage scheme as their method of repayment, given the fall in house prices which affects the home reversion market to a greater extent.

Another reason that has recently come to the fore in the equity release market is for homeowners to take out an equity release plan to provide financial support for their family. This maybe reflective of the number of first time buyers struggling to get on the property ladder in a difficult mortgage market, which are therefore turning to their parents for help.

Loan & credit card repayment is another popular reason cited by equity release customers for accessing some of the value in their homes.

Having outstanding debts can eat into a retired person’s income, especially at the moment with interest rates impacting on returns from savings, so clearing any debt which has extended into retirement can make a significant difference to their income.

For further advice contact 0800 783 9652

Admin

Well the simple answer is…anything.

The following article explains the many uses Equity Release Supermarket advisers have experienced in the current financial environment.

Upon receipt of the equity release cash lump sum there are no restrictions as to the usage of funds.

A large proportion of equity release customers are using the cash released from their home to repay debts, be it mortgages, personal loans or credit cards.

Research has shown that the majority of customers are considering taking out equity release schemes  to unlock some of the value in their property & repay these commitments, thus alleviating finances through their retirement years. 

A breakdown shows that approximately 24% of equity release sales are by customers who use the money generated from their home to repay their outstanding mortgage, while a further 33% of homeowners use it to repay the remaining forms of liabilities.

The main reason for this course of action, is to reduce the burden of debt at a time when income from investments has fallen due to the reduction in savings interest rates & stock markets. By reducing outgoings, retirees consequently have more disposable income with which they can enhance lifestyle & make retirement more comfortable & less of a worry.

Other popular uses of equity release include making home improvements including new conservatories, kitchens & bathrooms even alterations to the property to cater for disability purposes.

Other uses are the increasing popular holiday’s & cruises or giving the money to their children to help them get on the property ladder or even establish them in business. 

However, many people have commented that children would benefit from their inheritance when they are raising a family & finances are at their maximum. Therefore people are taking out equity release schemes to gift their children an early inheritance at a time when it would be of most benefit.  

Again, independent advice should always be sought as equity release can affect certain means tested benefits & gifting to children can also have implications that a suitably qualified adviser can explain. 

MG

Low interest rates are forcing pensioners to depending on savings to supplement their state pension to seek income elsewhere.

The UK’s more than eight million pensioners have seen their monthly income fall by almost 25 per cent over 12 months, SHIP (Safe Home Income Plans), the industry body for equity release, has found.

Many pensioners who have saved their whole lives with the expectation that they can use income from this capital and the state pension to fund a comfortable retirement are feeling the pinch.

With 80 per cent of UK pensioners relying on savings or share-based investment income to help fund day-to-day living expenses, according to the National Pensioners Convention, the base rate changes have had a drastic effect on pensioners’ income.

Unfortunately, thousands of pensioners are now contemplating how they will survive without up to a third of their previous income levels.

In April 2008, the average pensioner received a monthly return of £158 from their savings if they used an easy access base rate tracker account. These funds were added to a monthly state pension of about £393.

Since April 2008, pensioners have seen their savings income decline to just £16 per month, and state pension increases have not been enough to correct the discrepancy.

The recession therefore continues to stretch people’s finances and older homeowners have been some of the worst affected by rising costs of living and reducing returns from savings.

Equity release can offer a real solution for older homeowners & could be the answer for retirees looking to boost their income, if they are aware of the option.

Providers offering equity release income products are available via independent equity release specialists such as Equity Release Supermarket.

They can source such equity release schemes via the whole of the market which suit your personal criteria & enable you to utilise this additional income & enhance your retirement lifestyle.

For further information please contact 0800 783 9652.

Experience has shown it’s essential you review your finances regularly. Equity release schemes are no exception.

Who would have thought that 8 years ago, with essentially a handful of equity release providers; namely Norwich Union, Northern Rock, Hodge & Mortgage Express were the only companies in the market. How times have changed!

The equity release market now has over 20 companies competing for business. This has proved a healthy scenario given the inflexibility & higher interest rates of the earlier plans & enabled equity release schemes to develop towards the more flexible & competitive plans they are today. But complacency must not prevail. 

Competition with the equity release providers has developed new strategies of releasing equity & consequently driven equity release rates lower.

It is one of these former companies; Mortgage Express that I write.

Customers of Mortgage Express who have equity release schemes with them have received communication over the past months detailing an interesting scenario.

Mortgage Express were one of the earlier companies to recently suffer from the credit crunch after mainly being caught out in the buy-to-let market of which they were a major player. They are a subsiduary of the Bradford & Bingley.

Due to the lending difficulties they have experienced they have now closed to new business & consequently have written to its mortgagors including holders of its equity release schemes. They are willing to release these mortgages, without penalty to a new equity release company of your choice.

For equity release plan holders of the aforementioned it is a big decision to make as some of their schemes have interest rates as low as 5.99%, but some as high as 8%.

So would it be worth remortgaging? 

The answer lies in the following factors; current property value, age, interest rate at inception & the increased balance of the equity release plan. This is where independent financial advice is essential.

Equity Release Supermarket can ascertain via market analysis where any break even point is in transferring your Mortgage Express scheme to a new lender. Research is conducted from the whole of the equity release market & dependent on your requirements, a recommendation can be made from a panel of over 20 companies.

Costs are an important factor in the equation as they can detract any obvious gains of moving to a lower interest rate. This is where specialists deals that Equity Release Supermarket can obtain with lenders are of assistance, as the lower the transfer costs are, the earlier the break even point is for justifying a remortgage.

The lowest interest rate at the time of writing is 5.79% with LV=, hence for some people major savings can be made, however this rate is not available to everybody & advice must always be sought.

Should you be in this current predicament after receiving such a notification from Mortgage Express feel free to give Equity Release Supermarket a ring on 0800 783 9652 where they can conduct a free market analysis for you.

Mark Gregory CeMap CeRER

Equity Release Supermarket Ltd