Chief Executive, Equity Release Council
Many people’s houses are worth far more than their pension pots, so they should always be consideration in later lifer financial planning.
The convention that a pension alone will fund retirement is becoming an outdated one. The phrase ‘living off your pension’ increasingly sounds like something from a bygone era.
The fact is some people have not saved enough to live off their pensions. While others want to support their loved ones when they need it, gifting deposits for homes or helping to meet tuition fees. Those who own their homes can often do something about it, which is where we make the pitch for equity release, right? Wrong.
Consider your options
You should think about downsizing first. It’s not always cost-effective and it can be hard to find the right housing in your community, but it’s an option. You must check you are getting your full state pension and benefits too. Women are thought to be owed billions in unclaimed benefits, due to complex rules and government errors. You should also consider all later life lending options, such as a retirement interest only mortgage or a residential remortgage that extends into retirement.
You should think about downsizing first. It’s not always cost-effective and it can be hard to find the right housing in your community, but it’s an option.
These are not just common-sense recommendations. They are part of the Equity Release Council’s adviser checklist, which mandates the issues our advisers are required to explore with their clients.
Customers of Council members also benefit from four key consumer safeguards: a no negative equity guarantee; fixed or capped interest; secure tenure for life; and independent legal advice.
These safeguards, which compliment statutory regulation, are at the heart of our standards which have been developed over 30 years and which all our members must abide by. They underpin a market that has held safe and steady through the pandemic.
Equity release is only available to those aged 55 and over, so that is a convention that remains in place, but we would like to introduce another one. People should always consider the money tied up in their home, typically their largest asset, as part of their later life financial planning and they should use a Council member to do so.