The managing director of Surrey-based debt management experts Vincent Bond & Co said the equity release product could be a viable alternative to downsizing as a means to supplement retirement incomes, especially given the sharp increase in moving costs over the past decade.
Citing recent Lloyds TSB statistics that claimed that average moving costs had risen by 69 per cent between 2001 and 2011 to almost £8000, he said: “If you are downsizing and planning to move to a smaller property in the same area you may have less to play with than you think, especially when you take into consideration the actual cost of moving.
“The older generation is usually asset rich but cash poor so going into retirement with lots of upfront capital but no available income to live on could lead to a struggle in later years.”
Georgina Smith, managing director of equity release provider Stonehaven, said: “Lifetime mortgages have come a long way. With lenders offering the option to pay off some or all of the interest, customers can benefit from releasing equity from their home while maintaining control over their finances.”
- The total number of lifetime mortgage products on the market has fallen from 54 in September 2008, to just 29 last month, according to data provider Moneyfacts.
- Data from trade body the Equity Release Council revealed that the total value of lifetime mortgage products was £920m in 2012, up from £772m in 2011.
- Peak value: £1.15bn in 2004.
Stephen Davidson, director of Edinburgh-based Integrity IFA, said: “Equity release products, including lifetime mortgages have now lost the stigma of the past, and there are some good products out there, but it is still a difficult and time-consuming product to advise on. I’m sure that the fall in the housing market has also affected the amount of products available at the moment.”