Saturday, February 14, 2009

Compare Equity Release Schemes First

The falling economy and the reduction in interest rates have led many pensioners into a bleak financial situation. Indeed, many have seen the real and actual value of their income drop dramatically over the last few years and the outlook is continuing uncertainty.

The answer for some of these pensioners is to take out an Equity Release Scheme. You have to be a homeowner with little or nor mortgage to qualify for one of these plans and you should be aged over 60 years, and preferably older than that, to get an attractive deal.

Some schemes rely on the pensioners taking out some sort of loan or mortgage on their property which releases a lump sum, a regular monthly income or a combination of the two together. Other plans mean that the homeowner actually sells part or most of their house to gain an income or lump sum, with the other party benefiting when the house is sold.

Much has been written bout the pros and cons of this approach. It goes against the grain of many people to reduce the value of their assets but the reality is that many people will have to use this idea to maintain a reasonable standard of living in retirement years.

These schemes need careful thought first and it is crucial to Compare Equity Release providers, the types of plans they offer and much more, before coming to a decision. It seems that this part of the equation is often overlooked by many commentators.

First of all, there are the different types of plans that are offer generically. What suits one person will be different to another. Then there are different providers in the market place who supply these plans. They need careful comparison, too, because their charges, fees, interest rates, methods of calculation, financial strength and so on, are all different.

An equity release advisor needs to be a highly qualified person who knows the market and the plans very well. The interests of the pensioner will rely on him or her to take them through the maze described above. The financial ell being of their customers relies heavily on the adviser being able to do an outstanding job of giving the correct advice. It is far more complex than simply deciding whether or not Equity Release is the right move or not. There is much more to it than that.

An Independent Financial Advisor has many advantages in this situation. Only a few of them specialise in this area of advice so customers need to establish whether the IFA is tinkering with this mater or is experienced and gives advice on it regularly. Many safeguards are in place form the Financial Services Authority to protect the interest of the pensioner but it is always a good idea to try to find an IFA who has been recommended.

It sounds like a nightmare to go through this process but a quality adviser will make things perfectly clear. A good communicator will overcome any technical jargon and convey the salient points clearly to the prospective client.

Some people are forthright in their views about Equity Release, but it is here to stay for the foreseeable future. Pensioners need to make sure that consider things and compare Equity Release Schemes very carefully with a quality IFA.

1 comment:

  1. The best option these days to unlock the value of your home involves taking out a lifetime mortgage plan, equity release schemes will let you borrow money against the value of your home with the debt being repaid from its sale only after your death, seem an attractive solution to many cash-poor, asset-rich retirees.

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