Pension schemes have lost fundsrecently in the stock market fall thus decreasing their value on drawdown. This will leave people nearing retirement with a gap in their retirement funds and seeking another stream of income.

Financial security in retirement isn’t as certain as once thought. The escalating prices of utilies and groceries, coupled with the falling values of share based investments is making it more difficult for pensioners to meet their daily living costs. Having saved all their lives towards their pension fund, the comfortable lifestyle they were expecting is out of reach.

Lifetime or Reversionary Mortgages can release money tied up in homes. Before taking this path you should thoughly research the products available and it’s strongly advised that you seek advice from an Independant Financial Advisor as they don’t meet everyones needs.

The amount you can borrow through Lifetime Mortgages can vary depending on property value, age and health. Also you can generally only a release a small proportion of the value – 35% -55%. An important fact to consider is that releasing equity may affect your eligibility to means tested benefits and care funding.

You should always use an Equity Release Plan containing a negative equity guarantee. This means even if the value of the house drops significantly you will never owe more than your house is worth. Use a provider who is a member of SHIP (Safe Home Income Providers) and well known or recommended.

Important factors to consider are charges when using Equity Release. Your personal circumstances could change and an early redemption penalty could effect an eventual outcome.

Equity Release Schemes are regulated by the Financial Services Authority unlike the Sale and Rent back schemes which are not and often get confused.

It is a good idea to access independant legal advice before signing up. Obtaining all the fact to make an infomed decision is key as Equity Release can be very complicated

Are Equity release schemes as good as they sound? Do they deliver? The answer is YES. You need to research them thoroughly and find yourself a specialist advisor who deals with them on a regular basis and is up to date with all the latest facts.

We would predict a increase in the amount of people chosing to add equity release into their retirement planning.

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