As is often the case in these situations, much of this press and opinion was based upon a misguided idea about the product.
Newspapers had conjured up images of shady companies encouraging aging homeowners to release equity from their properties in expensive deals that would leave them out of pocket and their offspring out of inheritance.
Somehow this idea was allowed to continue for many years and this has perhaps always hampered the growth potential of the market. However, that all seems to have changed in recent years – and that’s down to a number of reasons.
Reasons to be cheerful
First, most equity release providers today will focus primarily on lifetime mortgages – whereby the homeowner retains full ownership of the property but borrows against it – much like a second charge loan. Such schemes are seen to be more user friendly than the traditional home reversion plans.
Second, we’re all starting to see the financial potential of the assets we’re sitting on. It’s news to no one that older homeowners have fared much better in the housing market than the younger generations – many of whom are struggling to get on the ladder at all.
As such there’s a lot of conversations being had about unlocking the wealth in properties, particularly as the pension crisis continues and the rising cost of living makes affording retirement something of a challenge.
Pension freedom growth
Indeed, even the introduction of pension freedoms has failed to put a dampener on the market’s growth with most providers reporting that the fact savers can access their pension pots in one go now hasn’t stopped growing demand for equity release.
Opinion has changed, not just of the product but of the topics of retirements and inheritance in general.
Why keep cash locked up in bricks and mortar when your home can be form part of your retirement planning?
It’s hard to ignore the values and argue against it being a viable option.