Equity Release Loans Supported By Parliamentary Group
The equity release loan and lifetime mortgage market has had quite a negative stigma attached to it over the years, particularly since some of the horror stories of the eighties and early nineties with regard to how some of these loan products worked.
Since the introduction of SHIP (Safe Home Income Plans) and regulation from the Financial Services Authority (FSA) for this sector, equity release loans have become clearer to understand and much safer, thanks to things such as no negative equity guarantees.
Despite this, many people remain extremely cautious of equity release loans as a part of their retirement planning.
Last week, however, an all party parliamentary group endorsed the use of equity release loans as a key factor in retirement planning for individuals, in helping to bridge the gap between their income from pensions and investments and their actual financial requirements.
The all party parliamentary group focused on the insurance and financial planning needs of retired people and those approaching retirement. It identified that equity release loans were an important part of retirement strategy, although the sector needed government support in the following areas:
• The urgent need for initiatives to increase the public trust in the equity release market,
• The need to ensure and maintain a high standard of advice to support growing demand
• The requirement for government to go further in their support for the industry as a key retirement funding solution.
Andrea Rozario of SHIP welcomed the news and said that it was “Gratifying to see housing equity taking its place in the mainstream retirement funding canon”, although there was still along way to go in developing new loan products and building public confidence in recognising equity release loans as an important part of retirement planning.
