Low Interest Rates Boost Equity Release

Low interest rates might be great news for mortgage payers but it is not so good for savers. Retired people, who have often worked so hard for the savings that they have built up, are losing out. It will come as a bitter blow to many of them that they are now getting such a very low rate of interest on their savings.

They may have better news in another way, though. Equity Release offers a way for them to supplement their income by using some of the value of their home. There are a number of ways of doing this and they should proceed carefully, but Equity Release might be a good solution for them.

Essentially, a home owner takes out some sort of loan against their home, or sells part of it, in return for either a cash lump sum or a regular income. There is little or no monthly repayment in the cast majority of cases and the total sum outstanding is eventually repaid to the lender when the home owner deceases. This gives security to the borrower who knows that they have an income for life and they have an assurance they can live in their property for the remainder of their life.

Although Equity Release got a bad name in the 1990, things have changed dramatically, now. For one, thing, the schemes are now regulated by the Financial Services Authority who are the consumers' champion for money matters. People taking out Equity Release get a great deal of protection in the way they are advised and have a good deal of redress should things ever go awry.

Furthermore, people can gain further confidence by making sure that any Equity Release schemed that they use is offered by someone who is a member of SHIP - Safe Home Income Plans. Again, they ensure that their members are being straightforward with their customers and that they are treated fairly.

There are downsides to Equity Release, of course. It may go against the grain to borrow against a home that is already paid for but better this than to live with insufficient income. Also, children will lose some or all of the inheritance if taking Equity Release so they should be involved in the decision. Equity release is a big move but most children would rather that their parents have a good standard of living in retirement and if Equity Release offers that security then they will be more agreeable to this solution.

One good tip is to use a solicitor of your own choosing. Better still, make sure that it is a lawyer who has a great deal of experience in Equity. If so, they will give you a huge advantage in explaining the consequences of your actions and how you can protect yourself. Equity release is can be a great alternative but it can be complex and having someone on your side can be an advantage.

Low interest rates are great for borrowers but not such good news for pensioners living on savings. Equity may provide a solution for them, though.

John Higgins worked in Financial Services for 20 years and now writes about all sorts of finance. He is author of http://www.equity-release-expert.co.uk which is a consumer information site about Equity-Release and Home Reversion Schemes. It includes help and resources from reliable sources.

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