Wednesday, 2 December 2009

Over 50s planning to use their home to fund pension

There is an article today in Home Move which outlines the results of a survey from Liverpool Victoria which found that more than one million Britons over the age of 50 are planning to cash in on the rising value of their property to help fund retirement.

However, the recent slump in the property market may have scuppered their plans after an average £27,250 has been wiped off property values since autumn 2007.

According to LV, around 12% of over 50s have opted to save less for their retirement because they believed the value of their home would continue to rise.

In September last year, consumer group, Which?, warned those considering equity release should do so as a last resort.

The consumer group believes that the schemes are sometimes expensive, inflexible and leave people with little equity.

Over the last few years, equity release has grown in popularity particularly among pensioners as a retirement solution. The decade-long property boom has meant that many pensioners have been sitting on large amounts of property cash.

However, Which? advises those considering equity release should do so cautiously and seek professional advice and recommends exploring other options and equity release should be a last resort.

One option could be downsizing to a smaller and cheaper property, or another option could be to use existing savings, or even borrow from family who can be paid back when the property is eventually sold, concluded Which?.

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