Equity Release Loans Being Used To Help Families
Fewer home owners are withdrawing equity from their homes in the form of an equity release loan, according to the latest figures from the British Bankers Association (BBA), as people are less keen to take on additional loan debt and, in many cases, do not have enough equity in their home to meet loan to value maximums.
According to the figures, the number of equity release loans fell by 16.5 per cent in February this year, compared with the same period twelve months ago, although these figures do not include specialist equity release lenders in the retirement and lifetime mortgage sector of the equity loan market.
Although equity loans in the mainstream loans market may be falling, the retirement equity release market is continuing to grow, according to statistics from equity release specialist, Key Retirement Solutions.
Dean Mirfin at Key Retirement Solutions said that his company has seen a significant increase in equity release loans, partly from retired people looking to boost their income, but increasingly from parents taking out loans in order to help their children.
With money tight at the moment and many working families continuing to struggle financially with large home owner loans and other debts, more and more retired parents are helping their children through equity release loans.
According to Key Retirement Solutions, the average amount of loan amount which is gifted to children is in excess of £23,000.
Mr Mirfin said “In our sector in 2010 we have seen business increase and we have seen a huge increase in the level of gifting. A lot of this money is being used by parents to help children out with debt and to help them on a day to day basis.”
“Due to the economic climate, the logic is that we would expect this figure to increase this year compared to last. Anecdotally we are ahead of the same part last year.”
