The industry definition of an equity release scheme is an over 55’s mortgage, albeit with no monthly repayments & finally settled on death or moving into long term care.
It is now becoming more apparent that whereas equity release was once considered a lifetime mortgage, people ‘temporarily’ have the opportunity to take advantage of one of providers’ shortcomings in its plan features.Do you want to learn more? Visit equity release calculator uk.
As equity release has been designed to run for the rest of the person’s life, lenders have always seeked to include potentially heavy early repayment charges, should the scheme be redeemed early.This penalty could be either linked to the change in government gilt rates, expire after a set number of years or as we shall discuss; linked to the Bank of England base rate.
It is this feature that has provided a window of opportunity should people over 55 require short term borrowing facilities.
Experience has recently shown that retired clients are now struggling in retirement; income from investments has fallen, annuity rates are not favourable & pensions are falling in popularity with more reliance on fund performance & contributions than defined benefit schemes.
Increasingly more debt is also evident in this age group & control of finances is becoming more difficult to manage in the present economic climate, credit cards & loans seeming the preferred choice.
Nevertheless, there are options available that can resolve these issues – part time work is becoming more apparent to increase retired incomes. Better management of debts & more consumer information being available as the silver surfers become more online savvy.
Advice on the suitability of equity release schemes will primarily discuss all these options & more. Should none of the alternatives be suitable from the client’s point of view, then at this point, equity release can be considered as a last resort.
However, another one of these options would be downsizing.
This would involve the emotive issue of selling a property that may have been a family dwelling for a generation. However, in order to raise the necessary funds required this may be the correct solution. Unfortunately, this option may not provide an immediate resolution.
House sales are eventually beginning to rise, however this is marginal at present & for someone who requires funds as soon as possible, today’s marketplace could prove an obstacle. But all is not lost – & this is where a temporary bridging facility is available & can be provided by a current equity release provider. Subject to eligibility, the Prudential’s equity release schemes can meet this objective. By releasing equity now with Prudential you would be benefiting from their link with the Bank of England base rate & early repayment charges.