Equity 'being used to pay debts', says Age UK
Published ¤ 07/07/2010 11:47:07
Some pensioners are unlocking equity from their homes as a last resort to use to pay off debts, a report has found.
Others are using it to pay for a more comfortable retirement and some are using the money to hand down to their family or make big purchases.
The conclusions come in a report by an academic for charity Age UK.
But since the start of the downturn, there has been a general trend of injecting rather than releasing equity.
UK homeowners increased the value of their stake in their properties by Â£22.3bn last year, the latest Bank of England figures showed.
They reflected continued decisions by homeowners to pay off more of their mortgages, unlike the previous 10 years, when homeowners had borrowed Â£327bn against the inflated value of their homes.
Age UK argues that during tough economic times, pensioners were finding it more difficult to live on a pension, and their savings were getting only small returns. Some were using equity release to pay for things such as home repairs.
The research reports on the experience of a relatively small sample of 533 equity release customers.
"The ageing of our society is a triumph of modern life, yet brings with it some real challenges," said Michelle Mitchell, Age UK's charity director.
"Equity release is clearly a useful tool to ease financial pressures in later life, but anyone considering it as an option should first seek good quality information and advice."
The author of the report, Louise Overton of the University of Birmingham, said: "It does not play much of a role in lifting pensioners out of poverty."
However, those who took the option were usually satisfied with the value for money offered in an equity release plan, the report found.
This article is from BBC News. Please click here to read the full article.
If you or anyone you know is having difficulty paying their debts, or is considering releasing equity from thier home, call PKS on the number above to discuss your options.
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