Parents use homes to help children
Tuesday, 13 Jan 2009 17:16
Homeowners use equity release to help friends and family
Homeowners are increasingly using the equity in their homes to help out their family and friends in the downturn, research has found.
Equity release firm Key Retirement Solutions (KRS) said 33 per cent of its customers used cash from their homes to help out loved ones financially, a significant jump from 22 per cent in 2007.
The figures show parents are still keen to help their children, despite being squeezed themselves, KRS said.
KRS chief executive Dean Mirfin said: "It comes as little surprise, in the current climate, that we have seen a considerable increase in the number of consumers who are giving some or all of the money away, this increase is the most significant we have ever seen."
The average age of customers seeking equity release also rose from 68 to 69 in 2008, indicating pensioners are being hit hard by rising bills and falling investment returns.
Mr Mirfin said: "The effects of the recent financial turmoil has considerably reduced many people's investments and brought returns on savings tumbling downwards.
"Pensioners have certainly not been exempt from this, and this in part may be why we are seeing an increase in demand from those deeper into their retirement years."
Although the value of equity release fell from £1.39 billion in 2007 to £1.18 billion 2008 as property values declined, KRS said demand for its own products increased.
"Equity release can provide retirees with financial freedom in retirement but it's not always the right option for everyone," Mr Mirfin said.
"We firmly believe no-one should commit to any form of equity release without seeking independent financial advice."