ERSA: Equity release becoming more popular
10 July 2012
Equity release is becoming an increasingly popular way for older homeowners to plan their retirement, according to the Equity Release Solicitors' Alliance (ERSA).
Chair of the organisation Claire Barker stated there is a lack of awareness among the general public regarding the amount of money they need in order to fund their retirement.
Saving figures
ERSA found that 46 per cent of people are currently saving nothing at all towards their retirement and 32 per cent are saving less than £250 a month, which means equity release plans may be needed in order to boost their financial situation later in life.
"The findings demonstrate there is a huge lack of awareness over how large a lump sum is needed to fund a retirement income. This is causing people to drift into retirement without adequate funding," Ms Barker was quoted as saying by Mortgage Finance Gazette.
She added more work needs to be done in order to educate people on the importance of planning for their retirement, although the specialist noted the good news is individuals are increasingly likely to see the benefits of using lifetime mortgages to fund their retirement.
Products of this nature allow homeowners between the ages of 55 and 95 to unlock money from the value of their house and the loan does not need to be repaid until after their death.
"With three-quarters of people not sure they will be able to save enough to live comfortably in retirement, they will need careful independent financial advice as to their options," Ms Barker said, going on to point out that attitudes towards equity release schemes are more positive.
Financial advice
The importance of taking financial advice before making any big retirement planning choices was recently highlighted by Ann Flynn at Standard Life, who told the Scotsman that many decisions of this type cannot be reversed.
Homeowners wanting to find out more about unlocking money from the value of their residence could use the equity release calculator from Key.