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Equity release increasingly used to pay down debts

Equity release increasingly used to pay down debts

Category: Retirement

Updated: 12/12/2012
First Published: 07/07/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
Increasing numbers of people using equity release are using funds taken from their homes to pay down debts or cover essential maintenance to their properties.

Just a quarter of equity release customers are using their money to make large one-off purchases, or to make early donations to family and friends, research conducted by the University of Birmingham for Age UK has found.

The remaining three quarters have used it as a way of boosting their available funds, either to increase their financial security, enabling a more comfortable retirement or as a last resort to relieve financial difficulty or debt.

The results of the report have led the charity to warn that while more than two thirds of over-65s have paid off their mortgage, many are getting by on low to modest incomes and are struggling to maintain their homes.

One in seven (14%) of those surveyed were in receipt of Pension Credit, and some of the respondents felt there was no option but to use equity release to pay for housing repairs in order to continue living in their homes - a key concern for many older people.

Almost two-thirds did not want to move away from family, friends and local amenities, just over half did not want the upheaval of moving house, and over a quarter said that it would have been too expensive to move house.

"The ageing of our society is a triumph of modern life yet brings with it some real challenges," said Michelle Micthell, 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 results of the research showed that, while less than half of respondents said they were very happy with the value for money their equity release plan afforded them, there were high levels of satisfaction reported in relation to the plan being right for their needs (75%), information and advice (79%) and safety and security (66%).

"The feedback within the report shows that there is a high level of satisfaction amongst equity release customers - a ringing endorsement of an often maligned industry," commented Laurie Edmans, chairman of Safe Home Income Plans.

"Indeed, with 97% of respondents saying they felt satisfied that the plan they took out was the right one for their needs, this study goes a long way towards dispelling some of the myths about equity release."

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