Equity release not recommended as pensioners struggle in crunch

29/06/2009

A warning over the potential financial damage caused by equity release loans was issued today by Clear Water Financial Planning.

According to the experts, borrowing an extra loan against the value of a property should only be a last resort.

The comments come at a time when the recession is putting increased financial pressure on many older people.

Data from Key Retirement Solutions has shown that around 1.4 million Brits are considering carrying on working past the age of 65.

In all, the number of people getting an extra income from paid work in this way was found to have risen from 12 to 17 per cent over the last decade.

The value of pension pots has also been damaged by the credit crunch.

Duncan Carter, director of Clear Water Financial Planning, said: "In most cases equity release ought to be a measure of last resort because that's what it is.

"What has caused confusion is that people view their homes as an investment and their pension when first and foremost they have to be a home ... We advise clients to calculate additional income they might need immediately and only drawn down that amount."

Tags; Debt Management and Banking, Retirement Money Problems,

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