Equity Release Mortgages set to rise

The coming year is set to see a big rise in the number of people opting for Equity release in order to fund their retirement, due to the current low interest rates. Equity release is a type of mortgage which allows you to release funds from the equity that you have accumulated in your existing property, if you are over 55 and have at least £60,000 clear in equity.

We were all shocked by the sharp fall in interest rates recently to try to combat the global credit crunch and increase borrowing, but this has a direct effect on savers. Retired savers who had planned to use the interest on their savings to subsidise their income from pensions are starting to look for different options.

The top equity release providers are expecting the volume of new business will rise sharply in 2009 expanding the market by £200 million. The value of the equity release market currently stands at £1.2 billion and it is expected to reach £1.7 billion in 2010.

This increase in people being offered equity release schemes by financial advisors does have its pitfalls as there is a general lack of understanding about how equity release mortgages work. Also the schemes tend to be based on rising house prices, but at the moment the property market is in free fall. So to save you and your family a shock in the future, do plenty of research before making the decision on which route to take.