As the number of people between 55 and 59 years old taking equity release loans is set to be three times higher than 10 years ago, there is concern that people are borrowing too much to soon.
Few people it seems are aware that the way interest is calculated on Equity Release loans can seriously eat into the value of a home. It can be attractive at the outset to improve the quality of life as retirement approaches and the TV adverts etc. push that hard. However a worse case scenario may see someone in their 50s take 50% of their homes value, and interest charges may have eaten up the entire remaining value before the person has passed, leaving nothing to hand down to the next generation. It’s a chilling though that before you die it’s possible the lender may end up owning your home.
There are calls to raise the age limit at which equity release schemes become available, or at least a greater education into how the interest payments are worked out and their accumulative impact over say a 20 year period.
Equity release may be a suitable scheme depending on individual circumstances. There are numerous different ways to raise money if that is what people in their 50s wish to do. We will always sit down with clients understand what they are trying to achieve and make recommendations on the most suitable way to achieve their monetary objectives.
Call Mark Fryer at Fryer Glass on 01276 301103 or email [email protected]
This is a very brief summary of a longer article that appears on the website www.thisismoney.co.uk