It would appear from a survey recently released by Aviva that people are still rather confused when it comes to equity release, even though sales of these lifetime mortgages has risen over the last few years.
The confusion not surprisingly stems from a time when equity release quite rightly had its fair share of negative press, however times have changed and with all the new regulation and safeguards ensuring that Over 55s choosing equity release have
• the right to remain in their property for life
• a ‘no negative equity’ guarantee that ensures they will never owe more than the value of their home
• and the opportunity to ring fence a proportion of their property to leave as inheritance
It will be interesting to see how people’s attitudes change towards this product in years to come as it is tipped to become a valuable part of retirement planning.
The interesting thing for me is that our homes are our biggest asset, so why as we get older are we so reluctant to dip into this valuable source of funds? Afterall our minds are slowly changing towards the old traditional values of having to leave an inheritance for the kids to more of a ‘live for today’ attitude, so will the sales of equity release increase in line with the demise of family inheritance as we know it?
The good thing is that people are and should remain cautious, with only 15% of those surveyed saying they would consider equity release to help fund their retirement. The decision to choose equity release is a big one and should not be taken lightly as it can affect the whole family.
However as we are living longer lives and as a result, an increased number of years in retirement, equity release could be an option that may help people live more comfortable lives, so it is important to ensure people fully understand the product and appreciate the benefits as well as any risks.
Although 82% of those over 55 surveyed said they felt they had a strong overall understanding of equity release, in truth many are still confused, incorrectly believing that it involves selling your home or becoming a tenant, which was the case with an older version of the product and now only accounts for about 1% of plans currently sold.
The key with equity release is to get sound professional advice. If you are struggling financially it may be worth talking through your options with the experts just to see whether it is an option you want to consider. It is also important to talk to your family too.
At the end of the day equity release shouldn’t be seen as the enemy as it can and indeed has helped many people lead easier lives but as with all financial decisions, you should always proceed with care.