Equity being used by older people in debt
October 14, 2008
According to a recent report a rising number of older homeowners are using the equity in their homes in order to pay off debts. Officials are concerned that this increasing trend is leaving more and more people without any means to support themselves in their retirement. The equity release programme has traditionally been targeted towards retired homeowners that want to create income from the equity in their homes, but this is now moving to a younger age group.
More equity release schemes are now being offered to people aged around 55 years, with some equity firms offering these loans to people that are heading towards retirement age as well as those that have already retired.
One industry official stated: ‘There are now some five providers offering products from age 55 onwards. We expect to see some of the new entrant providers during 2008 also offering plans to this age group.’
A study carried out by Key Retirement Solutions showed that the average age of the equity release customer had fallen from 69 in 2006 to 68 in 2007, which whilst not a huge drop did reflect the drop in the age of people that were opting for equity release programmes.
The industry official added that the results of the research ‘confirms our prediction last year that, as an increasing number of retirees do not have sufficient funds to live comfortably in retirement. More and more are turning to the assets tied up in their homes to supplement their income.’
The demand for this type of programme has risen, and this has resulted in around £1.4 billion being released, which reflects a rise of 25%. One third of this was used between around twelve thousand homeowners in order to repay debt.
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