Equity Release 2013 – What Does The Future Hold?
We are in a period of an unprecedented economic stranglehold in the UK. With such low interest rates, a lack of growth & with restrictive lending by the banking sector, for many trying to raise finance, it has been a real struggle.
This has never been as evident for those who need more cash in retirement. There are over 60,000 mortgages that have been taken on an interest only basis which still need to be repaid every year in the UK.
What solutions exist for these people in 2013 and for them to be able to repay these interest only mortgages in retirement?
Could a UK equity release scheme be part of the answer?
Could 2013 be the year that equity release achieves its potential in assisting the over 55’s reach their financial goals?
Equity release schemes are seeing an increasing demand for their services and in many ways we are learning how releasing equity can meet the financial demands of the retired generation.
Let’s consider the facts: –
- There will be over 720,000 baby boomers reaching retirement age in 2013
- The average pension fund with which one purchases an annuity is only £35,510
- Over 150,000 interest only loans will mature each year, with 60,000 of these having NO repayment vehicle
- There are 81% of people expecting to get more form their retirement pensions than they will actually receive
We can see evidently from these statistics that the old adage – ‘you fail to plan, you plan to fail’ applies to many in retirement planning. However, many people attaining state pension age have little time to allay their fears over having an unhappy retirement due to lack of disposable income, because of their enduring interest only mortgage obligations.
The one remaining advantage these retired homeowners have is the equity held within their property. Depending on the level of equity remaining, in proportion to the value of the property (loan-to-value), will determine what options they have available.
Retirees have over £750 billion worth of equity tied up in their homes which has been amassed with the rise in property prices over the past decades. This generation has benefitted from house price inflation and now it’s their time to turn a time of adversity into opportunity.
So which type of clients could take advantage of the equity in their homes to provide such retirement solutions?
- The 60,000 interest only mortgage customers who require a repayment vehicle to settle their mortgagees demands and maintain ownership of their properties
- Retirees who want to consider making necessary home improvements such as a new conservatory or kitchen
- Over 55’s who require lifestyle improvements such as a new car or annual holidays
- Parents who want to see their children not have to struggle getting onto the housing ladder & gifting them an early inheritance
- Home movers who wish to purchase a new home such as a retirement development or bungalow & need additional cash to achieve this
To obtain the best financial advice on generating tax free cash, or income in retirement, then always seek the services of an independent financial adviser. Companies such as Equity Release Supermarket will help you consider all options that should be utilised primarily such as any investments, consider downsizing or ascertaining whether any means tested benefits such as pension credit or council tax benefit are available.
As a leading broker in equity release solutions, Equity Release Supermarket can advise as to which the best course of action to take is. After eliminating all these possibilities, then your equity release adviser can assess which type of equity release mortgage can meet your requirements.
Therefore, if you are one of the 60,000 interest only mortgage clients under pressure from their mortgage lender to repay, then find an equity release adviser who can search the whole of the equity release market. They can then establish your needs and recommend either a roll-up equity release plan, home reversion or interest only lifetime mortgage to repay your existing mortgage lender.
Additionally, with an new range of lifetime mortgage schemes becoming available from the likes of Hodge Lifetime, Stonehaven and more2ife, these companies add a new level of retirement solutions for the equity release marketplace in 2013.