Aggregrating the Best Equity Release News…

With pension funds hitting a lull due to the economic crisis that we as a world find ourselves in, more and more people look to equity release as a bona fide way to plan their retirement. After paying their mortgage instalments their whole life, home owners are making the most of the equity that they have created. One of the commonly appreciated benefits of equity release mortgages is that you can unlock the equity in your home without having to downsize or move house. This enables a retiree to remain in the house they love yet realise the value of it at the same time.

Although equity release mortgages are only starting to be recognised as one of the few major instruments in retirement planning; as a concept equity release has been around for a long time. Home reversions in particular are certainly not a new product and many banks have been offering these for years. Now the major equity release providers have caught up with the banks and in many cases they now offer a much more comprehensive service.

Equity release as you or I know it, however, has come a long way in the last few years. The Financial Services Authority has regulated equity release for a start. Further, the major providers have come together to form a code of conduct known as Safe Home Income Plans. This can help the applicant get the best service available.

There are four forms of equity release that you can take out should you decide equity release is for you. However, the most popular according to recent statistics, are the lifetime mortgages. Home income plans and drawdown plans are the equity release mortgages that are the least used. Home reversion plans are picking up interest again after a few fundamental changes to the industry and the regulations. 

As equity release as an industry grows, one should expect these to proportionately grow in the ratios that they currently have.

Home reversion plans had some bad press a few years ago and rightly so. I don’t think anyone could argue that the industry wasn’t in a bit of a mess. More regulation is in place and IFAs need to take a home reversion exam before giving advice. Not only this, the equity release industry has tidied itself up on its own accord and is making a great name for itself amongst the public and the circles that matter. The press will continue to talk rot about the home reversion industry until the news stories from this successful cycle start to filter back to them. Lazy journalists are the biggest contributor to the bad press that surrounds equity release and home reversion plans and until they stop recycling old news without a good sense of editorial judgement this will continue.

Many contradicatory claims exist regarding the progress and activity of the equity release industry. Some of those sources suggest that equity release applications are falling as a result of the current economic climate. Others state that the economic turmoil is boosting the equity release mortgages industry as times are hard and people need help with retirement planning and also need a cash injection.

So which source to trust? Neither, is my humble opinion. I trust Google. Google states that the term equity release received 50,000 searches last month. Up 500 on the month before. This means that people online are increasingly interested in equity release and continue to search for pages related to the industry.

As far as anything in the financial services industry goes, lifetime mortages are actually quite simple. However, they haven’t always been simple: we have the Financial Services Authority to thank for that. Now, with regulations at a steady compromise between government and provider, we can be thankful that ‘industry standard’ is a term bandied about in the equity release and home reversion market.

There hasn’t always been an industry standard criteria or anything else for that matter. Terms have varied widely along with the criteria for equity release mortgages qualification. Now terms still do vary and there are different criteria amongst the providers but these differences are usually only on the peripheral and unusual criteria; not the standard ones such as age or loan-to-equity ratio.

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As much as lifetime mortgages have been around for generations in some form or another, it is still a growing industry. Talk of equity release flailing is not backed up by the figures, with applications for equity release mortgages up around 5-10% every quarter. It is a very useful tool for retirement planning and so will continue to rise both here and in the USA.

Home reversion as a form of SHIP equity release is also an industry growing far faster than any other in the financial industry…aside from corporate insolvency of course. The reason for its popularity is that home reversion does not affect the right to stay in the home. This right is guaranteed for life making it a win-win situation allowing you to stay in the home you love and have worked for as well as opening up more money so as to enjoy retirement.

Because of these clear advantages, home reversion plans will continue to grow in popularity as more people realise these important factors.

This is an inherently complicated question that I will attempt to simplify. Complicated for two reasons. One, equity release is an umbrella term for a range of equity release mortgages. Two, everyone’s personal situation is different so answering this in the general is an impossible task.

To break it down into good advice:

First, try and understand your needs. Equity release is a great means of retirement planning. It helps to supplement your income at a time when money is both needed and well received. 

If you could use some extra cash to help make your retirement more enjoyable for both you and your family, then the chances are equity release or home reversion is definitely for you.

If equity release is right for you, then the rest is simple. Talk to a provider (like us) and they will go through the range of equity release mortgages and help you understand which one is right for you.

In keeping with my American theme, I thought I would tell you a little more about how reverse mortgage, the USA’s equity release equivalent have really taken off in popularity. Still a relatively new term in comparison to equity release, Google is receiving 260,000 searches per month for the term ‘reverse mortgage’ and 90,000 for the slightly different term ‘reverse mortgages’. Compare this to the 49,500 a month for equity release and you can gauge the immediate popularity of the useful retirement planning product.

Although America is a larger market so its searches can be expected to dwarf that of the UK equivalent, the fact that it has taken so little time to excel to such capacity amazes me. It goes to show that equity release and reverse mortgages are great products that will stand the test of time.

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