Record number of pensioners using homes as 'cash machines' to fund retirement

Enable’s IFA’s in Bishop's Stortford know that may older folk are looking at every option when it comes to financing their retirement. According to one recent report older homeowners borrow £4.2m a day using equity release to bolster income.  Equity release is a loan that is repaid as capital plus interest, when the borrower ultimately sells their property, typically upon death or if they move into a care home. More than 5,400 over-55s used "equity release" to borrow a record £384m against their homes between April and June this year which is 18pc up on the preceding three months and 11pc on last year. The typical borrower releases £68,500 from their home, increasing to £143,000 in London.

But these loans can be hugely expensive because the longer you live, the more interest accumulates, and there are no repayments being made to reduce the debt. Interest rates for these kinds of loans tend to be higher than for traditional home loans, at around 5pc to 7pc. But it is easy to see why cash-poor but property-rich pensioners go for this option.  Nigel Waterson, chair of the Equity Release Council, said: "The average pension pot is around £25,000 - just half the amount of money people take out with equity release," he said. "Clearly pensioners have a gap in their income and property is a valuable source of wealth.”

Regulation of these loans was introduced a decade ago but many policies sold in the 80s and 90s were completely unsuitable and meant homeowners paid back sums that could quadruple the amount originally borrowed. Regulations now mean that borrowers must have financial advice before signing a deal, which must also be approved by a solicitor. If you want advice on better ways to fund your retirement Enable’s IFA’s in Bishops Stortford might be able to help.

Issued by: Enable Independent Financial Life Planners 
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
 Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE 

Government might offer equity release?

Earlier this month a report was launched for debate in the House of Lords calling on the Government to look at delivering its own alternative to equity release.  The report is called “The UK Equity Bank: Towards income security”, and has been put together by Cass Business School and the International Longevity Centre.  It suggests that the Government could come up with a system to exchange an income in retirement for a share in a homeowner’s property.

It would be a scheme aimed at delivering a simpler and cheaper alternative to other forms of equity release for homeowners aged 75-plus. It would mean that older people would be able to sell part of their home to the government in return for a guaranteed lifetime income. The scheme would initially be focused on those living on their own with small incomes who would be reluctant or perhaps unable to move and downsize.  On death the property would then of course need to be sold, the debt to the state would then be paid and the remainder passed to the person’s estate.

The report estimates that up to 80,000 homeowners might access it, compared to 19,000 that current use other forms of equity release each year.  In February, Pure Retirement became the first equity release loan provider to launch since 2010. If you are looking at ways of making sure you have sufficient funds for your retirement Enable's Independent Financial Advisors in Bishops Stortford are here to help.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE 

Grand Designs LIve...

If you are looking for home inspiration this weekend, then why not visit Grand Designs live, at the Excell Centre in London from the 4th until the 12th of May.

As well as offering aspirational home ideas, the show is packed with live shows and ideas on how to build a home, and lovely items to fill it with.

Located in the heart of Grand Build, Ask An Expert sponsored by VELUX offers a unique service designed to answer all of your project and self-build questions.

This year Grand Designs has teamed up with the National Self Build Association (NaSBA) and the Department for Communities and Local Government (DCLG) to bring you the first ever National Self Build Week (NSBW) that will be launched at Grand Designs Live London.