Equity Release Loans See Increase
Although many people are making efforts to reduce their home owner loans and other debts such as personal loans and credit cards, one area of the loans market which is seeing positive growth is that of equity release loans and lifetime mortgages.
The news comes from the equity release loan trade body SHIP (Safe Home Income Plans), whose latest figures have shown an increase of 12 per cent in new loans over the course of the third quarter of this year.
During the second three month period of this year, there was a total of £184.9 million offered in equity release loans, however, this had increased to £206.2 million by the end of September, as more and more retired individuals turn to the value which is locked up in their properties to fund their retirement and pay off existing loans and other debts.
As more and more people approaching retirement now have insufficient plans in place to fund their retirement, either due to a lack of planning, or due to poor fund performance, equity release loans are becoming a popular way of bridging the retirement funding gap and these loans are providing a lifeline for many retired individuals.
Around 88 per cent of all equity release loans have been arranged through a financial adviser or loan broker, who can offer professional advice on the matter, before a borrower commits to this type of loan.
Andrea Rozario of SHIP said “Considering the wealth locked up in a property as part of general financial advice or retirement planning is essential, as it will continue to be the greatest asset most people have as they approach retirement.”
“The UK population is ageing and, with insufficient pension provision and the prospect of meeting significant care costs, we expect demand for equity release loan products to increase significantly over the next few years.”
