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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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.

Via EPR Network
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