In the current economic climate, a great number of people are struggling to survive on their pension income. As the methods of quantitative easing have slowly eroded the value of savings, compromised traditional pensions and brought the rates of annuity down, many pensioners are struggling to maintain their lifestyle with even basic necessities. For many of these pensioners their home represents their only financial asset and equity release has become the best available option to gain an income or cash lump sum. With a free equity release calculator, UK pensioners can find out about the sums available to them and whether equity release is a feasible option for them.
Why is equity release becoming popular?
Pensions have lost the perceived stability of years ago. Despite a great deal of pension planning and preparation, many people have found that the real world value of their pension is simply not sufficient to provide their desired lifestyle. As people reach pension age, there are fewer and fewer options available to them for conventional finance products. However, over the last thirty years, UK property prices have risen by an average of almost six hundred per cent. This can mean that after paying off the majority of their original mortgage, there is a great deal of money tied up in the value of their home.
With a free equity release calculator, UK pensioners can gain an insight into how much money could be released from their property, without them having to move home. This can provide a tax free lump sum or an additional regular income. For many pensioners, this increase in disposable income can provide some hope for their retirement years.
Are pensions really performing that badly?
In the United Kingdom today, there are thousands of pension age people living in poverty. Many pensioners have faced austerity measures which although seemingly insignificant have compromised their disposable income dramatically. With an ageing population, this situation is only going to deteriorate as people who are approaching retirement are contemplating a retirement with little to no spare income.
The cost of living has increased dramatically over the last few years, with basic necessities such as water and energy costs increasing to an extremely high level. These increases have eaten away at the value of pension incomes, which means that some pensioners are facing tough decisions about how they will cope, especially in harsher winter conditions. Many people are looking for a viable alternative to provide additional funds without the need to try and sell their home in a potentially depressed market. Many people have sentimental attachment to their home and would like to spend the remainder of their lives in their family home. This is why equity release has become popular.
The Benefits of Equity Release
There are a number of equity release schemes available. There are many models of free equity release calculator, UK residents can use to highlight the potential benefits which could be available to them. However, there are some benefits which the majority of schemes provide. These include:
- A tax free lump sum, monthly income or both
- The right to live in the property for the remainder of your life or until you move into a facility for long term care
- Fixed interest rate for life
- Generally, no monthly payments are required on the loan. The balance only becomes due to be paid, when the property is sold after your death or you have moved into a care facility
- Flexibility to move if you choose. Many plans offer the ability to transport your plan across to a new property if you decide you would like to move to another home
- A guarantee through industry regulation that the balance of the loan will not exceed the value of the property. This ensures that equity release will not ever leave a debt to an estate
- The ability to plan your estate for your beneficiaries. Many people use equity release to supplement their income and assist children and grandchildren during these tough economic times. Many pensioners have assisted their family with a deposit to help them finance their own property, without jeopardising their own home in the process
- If you have sufficient income, there is also the option to make monthly interest only payments to maintain the balance of the loan. These are usually flexible arrangements for monthly payments which can provide a protected equity guarantee and ensure that part of your home is left for your beneficiaries.
If you are interested in equity release, it is worth taking the time to assess your options. With a free equity release calculator, UK residents can determine the plans which would be best suited to their requirements and the amount of release possible. This can enable you to make an informed decision about whether you would like to proceed to an application.