Equity Release Information from the Equity Release Expert

EquityRelease is a growing area of interest. The Credit Crunch is causing real difficulties to many people right across the world.  Amongst the hardest hit are those on fixed incomes and living off savings.  Pensioners often fall into both categories.

On the one hand, their pensions are either relatively fixed or increase at a slow rate and do not keep up with inflation.  The costs of everyday essentials and household bills like Heating and Council Tax continue to rise – in spite what the official overall rate of inflation says.  And when it comes to food bills the increases in process can make you gasp at what has happened.

On top of that, there is the effect the recession. The government is attempting to reduce costs for businesses and stimulate the economy generally by reducing interest rates.  Whilst that is positive news for lots of companies who have commercial loans and individuals with home mortgages, it is much less so good for people on the other side of the coin, the savers.  They are noticing that interest paid on their bank and building society accounts keeps going down dramatically.

This is unwelcome for everyone who has saved but for those who rely on a monthly income from these savings it is having an incredible effect.  Just consider retiring about ten years ago.  You would have got around 7.5% on your savings account.  Today, it is perhaps 1.5% and falling.  So, an investor with £10 000 in the bank could have seen their regular monthly income fall from £62.50 to just £12.50.  It gets worse when you consider that there is thee effect of inflation to account for as well.

One of the things that pensioners may be able to take advantage of is a scheme called EquityRelease. This suits people who have a home of their home which has little or no borrowing on it.

There are a several ways of going about it, but, in essence, some type of loan is taken out with a charge taken over the property which is specially designed for the purpose of giving either a monthly income or a cash lump sum.  A combination of the two is frequently possible, too.  The loan requires
little or no monthly repayments and the homeowners are free to stay in their property and enjoy the additional income from the plan.

There are obviously downsides to this approach.  The pensioners will be forfeiting some or even all of the value of their house.  Their Will beneficiaries will receive a reduced inheritance or might not receive anything whatsoever.  There are advantages and disadvantages and you can see more information at Equity Release.

Whilst it goes against the grain to have to consider this as a course of action, and there are some Pensioners who will be almost horrified at the idea of taking out equity release in retirement, we are into new territory.  The Credit Crunch is very severe and will continue for a long while.  Offsprings may need to understand that their parents will leave a reduced inheritance in order that retirement can at least be tolerated.  This might be preferable to living on a shoestring and forever worrying about the finances.