BRS Equity

December 18, 2012 11:42 ET

Equity Release Can Supplement Pension Incomes, Says Bower Retirement Services

Releasing money locked up in property is a quick and simple way to supplement the state pension

LONDON, UNITED KINGDOM--(Marketwire - Dec. 18, 2012) - According to Bower Retirement Services equity release is a straight forward and most cost effective way to supplement the low state pension. It points out that despite Chancellor George Osborne's recent announcement that state pensions will increase by 2.5% in line with the Consumer Price Index, pensioners are suffering from disproportionate inflationary pressures. Rising heating and food prices have hit pensioners particularly hard in recent years and the current £107.45 per week doesn't go very far.

Under the new budget proposals, pensioners will receive just £2.69 extra per week. But as utility prices are predicted to go up again in the new year this rise is not going to mean anything in real terms.

Equity release is a method of releasing the money locked up in the bricks and mortar of a home. Many pensioners are cash poor but asset rich, i.e. they own their own home. This is not very helpful when it comes to buying food and utilities. But the tens, if not hundreds, of thousands locked up in a property can be released using equity release with Bower Retirement Services. This money can then be used to supplement the state pension either with a lump payment or regular cash withdrawals.

Equity release is flexible, easy and cost effective. There are several different formats equity release may take. Often the most common and best suited to retired people is the lifetime mortgage with flexible cash release, also known as a drawdown plan.

The equity release provider will lend a percentage of the property's value with interest being rolled up on the loan. However, unlike a mortgage, there are no monthly payments to be made and the interest is only repaid - along with the original amount borrowed - when the property is sold upon the death or move into permanent long term care of the surviving homeowner. In addition, cash withdrawals can be taken out on top of the basic loan amount at frequent and/or regular intervals. These withdrawals can continue until the cash reserve has been used up or until a pre-specified date has been reached. The appeal for pensioners is that these basically offer a regular income which can bolster the state pension.

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