Old are equity rich but cash poor

Key Retirement Solutions warns that despite the property values of retired homeowners rising by £148bn over the past 12 months too many are living close to or below the poverty line.

The IFA says that as house prices continue to rise more pensioners are becoming equity rich but cash poor and are using equity release to unlock their wealth.

It says that the equity release market has experienced rapid expansion over recent years showing growth of 86% in the first half of this year.

Colin Taylor, managing director of Key Retirement Solutions, says: “The advantage of equity release schemes is that they enable the homeowner to unlock some of the equity in the property without the need to sell up and move home.”

• Blevins Franks Mortgage Services has launched a guide to equity release schemes.

The guide has been designed to inform people aged 60 about the options available to them and to highlight both the benefits and pitfalls.

Substantial increases in property values mean there are large amounts of cash tied up in property which can be released either to raise money to supplement their pensions or to reduce potential inheritance tax liabilities.