Equity release overhaul tipped by new Discussion Paper

27/07/2009

Possible future reforms of equity release loans are due to be mapped out by an industry trade body.

Safe Home Income Plans (SHIP) is to release a new Discussion Paper in London later today, looking into the role of the loans in the post credit crunch world.

It is calling for a government inquiry into the role which equity release could play in "helping to fund today's and tomorrow's retirement funding needs".

Equity release loans depend on a borrower taking out money against the value they have already "built up" in their home.

It is a popular way of getting credit for older Britons, many of whom have already paid off most or all of their original mortgage.

However, the credit crunch has affected the public perception of equity release - as house prices have fallen by around 15 per cent in a year and many people have become wary about taking on any additional debt through loans.

In a statement released ahead of the launch, SHIP said: "People, at or after retirement, turning to equity release products are becoming more diverse in their needs and circumstances, and are putting their property equity to a much wider set of uses than before, including funding care, tax and estate planning, or enhancing their lifestyle."

Andrea Rozario, director general of SHIP, added: "There needs to be a wide ranging debate about the way housing equity may be used in the future, reflecting wider social and economic trends."

Tags; Debt Management and Banking, Retirement Money Problems,

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