Retired Brits living off of a small pension pot may want to think about an equity release scheme.
Anyone over the age of 55 who owns their home is eligible for one of these schemes, which releases cash from the equity built up in a property.
However, those considering one of these schemes have been urged to seek advice.
Such is the suggestion of Christopher Friel, financial advisor at the Prudential, an international finance company dealing with 250 million customers.
He said: "It is completely unique to the individual. There are lots of good equity release plans, but there are also loads of bad ones.
"It's about getting the advice and making sure that where you go is reputable."
Mr Friel gave this advice following the release of Saga's price indices on March 16th, which found that 21 million people aged over 50 are facing higher rates of inflation than the rest of the nation.
This could mean that people over this age find they have a smaller pension pot than they were expecting.
If this is the case, they could consider equity release, as they can obtain a lump sum of cash to spend on whatever they like.
Other advantages to these plans include:
• A tax-free cash lump sum is released from the equity built up in a property.
• The person can remain in their home for life.
• It can be used to pay off debts or to help create an income for life.
However, like all financial products there are certain risks associated with equity release.
These may include:
• A possible impact on benefits that the person obtains.
• Some schemes may make it harder for the consumer to move house.
• Depending on the type of equity release chosen, there may be a risk of repossession if the person cannot keep up with their repayments.
|