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EquityRelease.net Publishes New Beginners Guide Factsheet For Equity Release Mortgages

The equity release resource website EquityRelease.net is pleased to announce that they have added The Essential Equity Release Factsheet to the website to provide UK residents with a concise and easy-to-read introduction to equity release schemes in the UK. EquityRelease.net is an independent equity release information resource website that provides a detailed information resource of equity release as well as free equity release advice and quotes.

Many older UK residents look forward to retirement as a time when they can engage in hobbies and activities that were not possible when they worked. Unfortunately, there is growing concern over whether people’s pension and retirement savings are enough to maintain their standard of living and spend their time as they please. As many retiring homeowners look into equity release as a means to provide the income they desire in retirement, the information website EquityRelease.net hopes to answer their basic questions with the addition of “The Essential Equity Release Factsheet” to the website.

“Our goal as always is to help older UK residents understand how equity release in their homes actually works, and the new infographic reduces our voluminous information contained on the website to its most basic terms, primarily using graphics to explain how equity release works,” said an EquityRelease.net representative.

As an introduction to equity release, the fact sheet begins by explaining the basic nature of home equity release. The equity of a home is the current value on the open market minus the debts held against it. Equity release allows the homeowner to obtain cash for this value without having to move out of their home. Equity release is for individuals over the age 55 who own property valued at around £70,000 or more, and most schemes also stipulate a minimum and maximum amount that can be released.

A common question answered by the fact sheet is who can take advantage of equity release. The new infographic shows the general profile of people that routinely take advantage of equity release as well as the eligibility requirements that they must meet to qualify. Many people have a fear of losing their home with equity release schemes so the fact sheet explains the limited risk of losing a home and how it can be avoided.

When it comes to the basics of releasing equity, readers will learn about its two forms, which include lifetime mortgages and home reversion plans, which are both approved and regulated by the Financial Services Authority (FSA). While the Essential Fact Sheet infographic is meant to be an introduction to equity release, readers can find far more detailed information on the website about all aspects of equity release. Website visitors can also take advantage of free advice and a quote provided by one of their specialists. For more information, please visit http://www.equityrelease.net/

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Research Show 4.4 Million over 21s Still Rely on the Bank of Mum and Dad, reports Bower Retirement Services

Research from LV = reveals 4.4 million over 21 year olds still borrow money from their parents. The average monthly donation from parents to adult children is £175. This is used to cover rent, bills and help pay off debts. Additionally £9,476 is awarded to fund weddings, holidays, further education and to help young adults get onto the property ladder. Although it helpingyoung adults is hardly surprising, the research revealed parents expect to continue to support their ‘children’ until the age of 38, now the average age of a first-time property buyer.

This obviously puts great financial strain on Britain ‘s parents. It eats into retirement funds and one in ten parents surveyed by LV = admitted they had spent everything they had on their children. The issue isn’t going to go away soon, particularly if predictions that the average age of a first-time buyer will be 41 by 2025 are correct.

Parents need to prepare for the future early to ensure they are well equipped financially to provide for themselves and help out their grown-up children when necessary. There are several options available, but with interest rates currently being so low, saving plans aren’t the most viable option.

Equity release plans are a more effective option for homeowners. Bower Retirement Services, an award-winning equity release advice service, can help homeowners find anequity release plan that’s right for them.

There are four types of plans available: lump sum lifetime mortgages; lifetime mortgage with flexible cash release, also known as a drawdown mortgage; interest only lifetime mortgage and home reversion plans.

The most suitable, and now the most popular comprising 68% of the market, are drawdown plans. Homeowners are lent money based on their property’s value and additionally can withdraw regular cash amounts at a frequency and value chosen by the individual. Interest is charged, but it’s only repaid when the homeowners die or move into permanent care. These mortgages allow parents to look after themselves during retirement but also offer the ability to provide assistance to their offspring.

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Equity Release Becoming Popular Retirement Fund Solution for Baby Boomers, say Bower Retirement Services

The total value of equity release advances from April to June 2012 was £224.8 million, reported the Equity Release Council, an increase of 22% on the same period of 2011. Additionally, this amount represents the highest quarterly figure since 2009 (£231.7 million). Furthermore, the real number of plans grew by 16% between Q2 2011 and Q2 2012 showing interest in the market is up, along with actual value.

According to the Equity Release Council’s figures, people are now choosing to take drawdown plans instead of lump sum mortgages. This shows they prefer to spread risk and use equity release as a retirement income. The news comes as its revealed retired homeowners now have a total unmortgaged property wealth of £756.7 billion.

Bower Retirement Services, which offers award-winning specialist equity release advice, says equity release is a simple and effective option for homeowners looking to provide for their retirement and it exploits the property price rises of the last forty to fifty years. Many in the baby boomer generation lost large amounts in pension blunders in the nineties and again in the last recession. However, thousands continue to be locked up in property, potentially providing a retirement income for homeowners.

Bower Retirement Services offers advice on all types of equity release, from lump sum lifetime mortgages to home reversion plans, and its equity release calculator is designed to help homeowners accurately gauge how much cash they can expect to release on each type of plan.

There are four types of equity release plan, but drawdown plans now the most popular, accounting for 68% of the value of the entire equity release market. Bower Retirement Services says these types of mortgage are most suitable to homeowners looking to provide themselves with an income during retirement. The lender loans the homeowners a percentage of the property’s value and also agrees to pay a regular cash sum, or ‘drawdown’ on the mortgage value. Interest is accrued, but it is not charged until the homeowners die or move into long term care. Homeowners choose the term and value of the drawdowns, offering more flexibility than a standard remortgage plan.

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Bower Welcomes the ReLaunch of SHIP

Bower Retirement Services, winners of the 2011 Equity Release Awards, welcome the relaunch of Safe Home Income Plans (‘SHIP’) as The Equity Release Council (The Council). Bower welcome also the decision of the trade body to broaden its membership to include financial advisers, solicitors, surveyors and other interested parties.

SHIP was established in 1991 by the major product providers as the body to safeguard the interests of consumers entering into equity release plans. Over the past 20 years, SHIP has been very successful in improving the reputation of equity release and in promoting consumer awareness of the products available. The main focus of the Equity Release Council will be to protect consumers and increase education, awareness and understanding of how equity release works, the options available and the consumer safeguards that are in place.

Geoff Charles, Managing Director of Bower commented:

“We welcome the new organisation and look forward to joiningand supporting the Equity Release Council. The changes are excellent news for elderly homeowners who are seeking to release capital from their homes in order to raise a lump sum and/or to supplement their retirement income. The extension of the membership and SHIP standards to all participants in the sector will strengthen consumer confidence and reinforce the message that equity release plans are now mainstream retirement products.”

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LV= Reports That Up To 1.2 Million Over-50s May Use Equity In Home To Supplement Pensions

LV= has revealed that ‘Home is Pension’ is a common mantra among the over-50s workforce in Britain as shown in a recent report published by the retirement specialist. Although 54% of the over-50s believe the value of their home has fallen over the last three years, an estimated 1.2 million ‘HIPpies’ (‘Home is Pension’) may use the equity in their home to help supplement their retirement income.

Only 19% of all over-50s still in work feel that they are financially on track to retire as planned, while the number of working over-50s that believe they may have to delay retirement for financial reasons has increased hugely, to 41% from just 28% this time last year. Homeowners over 50 estimate they have lost £60 billion in property value due to recent volatility in the housing market.

However, this has not put many off using the equity in their homes to help fund retirement, with nearly a quarter of working over-50s considering using some, or all of the equity in their home to fund their retirement. The ‘Home is Pension’ mantra is so valuable to over-50s, that 54% would suggest their children include investment in property as part of their retirement planning.

When working over-50s were questioned about the impact an interest rate rise would have, LV=’s research found that 40% would have to reduce their pension contributions just to meet the higher cost of paying debts. More than four in ten (44%) of all working over-50s and 34% of those aged 60-69 in work, have an outstanding mortgage debt on their home.

Vanessa Owen, LV= Head of Equity Release, said: “It seems to be increasingly commonplace for those approaching retirement to consider using the equity in their property as part of their overall retirement plan. Continuing doom and gloom over volatility in the housing market and seeing some properties fall in value, hasn’t deterred the UK’s “HIPpies” and many are still positive that the equity in their home is their best chance of having a more comfortable retirement.”

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Workers Beyond Retirement Age To Double In 10 Years

Prudential has revealed that UK businesses are bracing themselves for a surge in staff looking to delay retirement with around 1.8 million people expected to be working beyond traditional retirement ages in just 10 years.

The findings from new research commissioned by Prudential among finance directors at UK businesses found 24% of companies expect staff to work beyond retirement age in the next 10 years, with the proportion of people in the workforce who are past traditional retirement ages expected to more than double to 1.8 million people.

Larger companies expect to see an even greater proportion of their workforce working beyond retirement, with 39% of finance directors at larger firms expecting to have to accommodate requests from staff to work longer.

UK companies anticipate this will mean around 6.3% of their workforce (equivalent to 1.8 million people across the UK working population) will be made up of people working beyond statutory retirement ages in 10 years, more than double the current proportion of 2.6% of company workers (equivalent to around 752,700 people***) who currently work past retirement.

The study also found that in the past 12 months alone, 7% of finance directors have reported an increase in the number of employees asking to work past traditional retirement ages.

Martyn Bogira, Prudential’s Director of Defined Contribution Solutions, said: “As health and longevity continue to improve and people look to fund a longer life in retirement, it is inevitable that compromises have to be made.

“The statutory retirement age for men and women is due to rise to 68 by 2046, so working longer will be a fact of life for those entering the workforce today but these findings suggest that increasing numbers of pensioners will be forced to work later far sooner than this. Employers have told us that their staff costs could rise as their employees work for longer.

“Workers face the stark choice of either having to save more for their pension from an earlier age or having to work longer if they are to avoid taking a significant drop in their standard of living in retirement. Early pension saving is critical and we strongly encourage people not to delay starting a pension.”

The research also identified a clear North/South divide. Companies in the north of the country expect an average of 16.2% of their staff to work past the statutory retirement age compared with an average of 2.4% in Greater London and the South East.

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According To The Prudential’s Equity Release Index, Homeowners In England And Wales Own £654 Billion Property Equity

According to the Prudential’s Equity Release Index, Homeowners in England and Wales aged 65 and over have retained £611billion of equity in their property – with a further £43bn held in Scotland – as the housing market begins to show signs of stabilising following two years of decline.

Prudential’s Equity Release index tracks the amount of equity held in property by people over 65 years old in England and Wales. Figures are based on Prudential’s analysis of data from the ONS Family Spending Report (2006), the Land Registry House Price Index (August 2008) and GfK NOP (2007). Specifically, weighted number of households data is taken from the ONS Family Spending Report 2006. Home ownership data is taken from the NOP data. Average house price per region is taken from the Land Registry Index.

The Index also shows modest gains for homeowners aged over 65 in Wales, the West Midlands, London and the North West.

In Wales, the over-65s saw values rise by £3448, followed by London’s over-65s who gained £3296, while in the West Midlands retired homeowners gained £2789 and the North West saw increases of £818.

Homeowners in Scotland aged 65 and over have retained £43billion of property equity and saw modest gains in the second quarter of 2009, with an average increase in property values of £5235 since March, although the total value of property equity for the over-65s is still more than £3 billion lower than it was a year ago.

The Prudential Equity Release Index shows that, in the second quarter of 2009, Scottish over-65s saw the value of the equity in their homes increase by 3.7%. Over the same period, the equity in homes owned by over-65s in England and Wales remained almost level, decreasing by just 0.03%.

The picture across England and Wales as a whole is one of stabilisation, with property equity for the over-65s falling by less than £43 since February – the lowest fall recorded by the Prudential Equity release Index.

The recent fall of just £43 contrasts sharply with the period between October 2008 and February 2009 when property equity in England and Wales for homeowners aged 65 and above dropped by an average of £21,377.

Property equity can provide a valuable source of retirement funds, especially against a backdrop of low interest rates and equity price falls in the past two years which have hit pensioners’ non pension savings.

About Prudential
“Prudential” is a trading name of The Prudential Assurance Company Limited, which is registered in England and Wales. This name is also used by other companies within the Prudential Group, which between them provide a range of financial products including life assurance, equity release, annuities (including an income drawdown option), pension plan options and investment products like the unit trust and tools, such as the tax calculator. Registered Office at Laurence Pountney Hill, London EC4R 0HH. Registered number 15454.

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£611 Billion Equity In Homes Owned By Over 65s

Prudential has revealed findings from its latest Equity Release Index* which show that despite falling house prices and the current economic climate, homeowners aged 65 and over have £611.5 of equity in their property.

These significant amounts of property equity contrast with the current squeeze on retirement income being seen in today’s volatile market and economic conditions where rates on annuity and income drawdown products are falling.

Individuals buying guaranteed annuities, for example, have seen rates fall by up to 10 per cent since the middle of last year and Prudential believes this fall emphasises the need for pensioners to look at all potential sources of investments and retirement income.

Property equity can deliver a valuable income, especially against the current backdrop of low interest rates and equity price falls of around 30 per cent over the past two years which have hit many pensioners’ non-pension savings.

Prudential’s Index, which tracks the amount of home equity owned by people aged 65 and over in England and Wales, found that 42.5 per cent of this equity belongs to those living in London and the South East.

The Index also reveals that the value of property equity belonging to homeowners aged 65 and over fell by £80.6 billion between October 2008 and January 2009, with the average homeowner over 65 seeing the value of equity they have in their home fall by £21,377.

London homeowners aged 65 and over saw the highest decline for any region in England and Wales with equity in their homes falling by £38,057 while those in Yorkshire and Humberside experienced a decrease in value of £13,028.

Keith Haggart, Director of Lifetime Mortgages at Prudential, said: “Every homeowner is being affected by falling property prices, but it’s important to remember that many people, especially retired homeowners, bought their homes years ago and have benefited from past growth in the housing market. Even in this depressed market, the vast majority of retired homeowners still have considerable wealth tied up in their properties.”

He continued, “Equity release has an important role to play in providing retirement income particularly when other sources are under pressure.

“Annual figures from SHIP (Safe Home Income Plans) show that equity release sales in 2008 were almost £1.1 billion and were just nine per cent lower than 2007, despite the collapse in the wider mortgage market.”

Equity release schemes can be an excellent way to help retirees to secure an income, and any provider who is SHIP registered provides a no-negative equity guarantee as well as guaranteeing that the mortgage interest rate is fixed for the term of the loan.

 

* Prudential’s Equity Release index tracks the amount of equity held in property by people over 65 years old in England and Wales. Figures are based on Prudential’s analysis of data from the ONS Family Spending Report (2006), the Land Registry House Price Index (August 2008) and GfK NOP (2007). Specifically, weighted number of households data is taken from the ONS Family Spending Report 2006. Home ownership data is taken from the NOP data. Average house price per region is taken from the Land Registry Index.

About Prudential:
“Prudential” is a trading name of The Prudential Assurance Company Limited, registered in England and Wales. This name is also used by other companies within the Prudential Group. Registered Office at Laurence Pountney Hill, London EC4R 0HH. Registered number 15454. Authorised and regulated by the Financial Services Authority.

Find out more on Prudential’s product range including endowments and equity release schemes, including equity release mortgages on the Prudential website, www.pru.co.uk.

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