Claim a Right Mortgage Plan to Live Happily in Retirement

When Dr Ros Altman, a Governor of London School of Economics, put her views on equity release interest rates, little she knew of the reactions from Equity Release Council, the governing body of equity release scheme. The council has vehemently argued against the theories of leading economist who had criticised the much popular scheme for high interest rates charged to release equity from the house.

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It’s true that equity release charges huge interests on its schemes, almost double the standard mortgages’ interest rates. It charges above than 7 percent per annum on most of the schemes. However, there is some flexibility provided to people aged over 75 years. Such people can avail equity release scheme at 5 percent interest rate. Added benefits are provided in the form of no interest for lifetime or till their stay in house.

A theory projected by equity release naysayers suggest that at 5 percent interest rates, principal amount gets doubled in 15 years while it takes almost 10 years for the same principal amount to double up at the 7 percent interest rates.

Dr Altman is concerned of senior citizens not getting exact value on their properties. Their entire savings get used up in building the house and at the end of the day, they feel cheated.

However, Nigel Waterson, Chairman of Equity Release Council, didn’t take it well and brought his opinion on the desk. According to Waterson, the naysayers should at first calculate the positives and then weigh down the scheme. He points out the positives of equity release scheme that are fairly up with what other mortgage policies have to offer to senior citizens.

The certified members of ERC offer equity release plans at lower interest rate and the referred case by Dr Altman might have not been availed from the certified member.

Besides offering the product at lower equity release interest rates, equity release safeguards various interests and benefits of senior citizens. It guarantees that even in the worst case scenarios, customers will not have negative equity on their house. Senior citizens are also provided the right to retain ownership of house for entire lifetime.

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Waterson describes equity release as a practical option, in present times, to fund own retirement. It’s a fact that most retirees in UK are living financially constrained lifestyle and equity release is a right way to generate income from the house. If you go for downsizing the house, there might be physical and emotional bearings on the life of retirees, but with equity release you are in win-win situation.

The Chairman defends equity release scheme by the flexibility it offers when the occupant decides to move to other property or shift the plan to any other property of theirs. In the ideal world, you may not have to resort to such means but under the prevalent circumstances, you only need fair deals for a happy and financially rich retirement.

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