With many Brits still unsure over how equity release products actually work, or even what it is, ar you making the most of equity release to fund your retirement?
According to the latest report by SHIP the majority of Brits expect to lead a high standard of living when they retire. However, for many there seems to be a wide gap between expectations and the reality. For instance, 23% have suggested that their pension will be insufficient while 35% do not have a regular pension to fund their retirement.
It is these individuals who may really be able to benefit from equity release. The worrying part is that SHIP has revealed that around half of Brits are not clear about what equity release actually is. The report claims that 14% of people have not even heard of the product, while about 23% wrongly assume that it is the same as a remortgage or a sale and rent back scheme. This misunderstanding about this product makes it difficult for people to know how it can help them in retirement.
SHIP suggests that there could be a number of reasons for this lack of awareness about the product. Top of the list they found that the vast majority of individuals do not regularly seek professional financial advice when planning for their retirement. Interestingly, 32% of respondents used the internet as a means to help them plan for retirement. The disadvantage with this alone is that individuals may not receive professional financial advice on the full range of financial products that are available to them, such as equity release.
In another report by Liverpool Victoria, it is estimated that 1.3 million people plan to use their property to help with retirement costs. With around 16% of respondents viewing equity release as their preferred product to extract value from their home upon retirement. The two reports show striking evidence of the contrast between those who are aware of the product and those that are not.