Equity release mortgages – an option for retirees?

Equity release mortgages are being considered by more retirees who see their pensions dwindle while their day to day costs increase.

The Office for National Statistics have released new figures revealing that while inflation fell slightly during November 2011, the headline rate remains well above the target. Older people tend to be affected by high rates of inflation more than any other age group and may turn to options such as equity release mortgages in order to raise money.

General secretary of Unison Dave Prentis said: "Christmas should be a happy time, but for many people the stress of finding, or keeping a job, means the financial pressures are enormous. When you add in the cost of food and fuel, there is not a lot of spare money to spend in the high street.

Older people struggling to cope with the rising cost of energy may be forced to consider ways to raise money from the value of their home to make ends meet."

For most people their greatest asset is their home, and for many property plays a large role in retirement planning. Poorly performing pensions have made unlocking cash from property an increasingly attractive option, and many are chosing to opt for equity release.

The big selling point with equity release mortgages is that home owners can stay in their home. For many older people the thought of having to move out of a well-loved home and downsizing is distressing.

Home owners can use the equity in their home to raise capital without having to move or make monthly repayments. Equity release mortgages are available to homeowners aged 55 plus and allow home owners to retain the right to stay in the property until death.