Despite falling house prices, homeowners aged 65 and over still have a whopping £611.5bn of equity in their properties – meaning there is still plenty of room to manoeuvre when it comes to arranging their finances.

The latest findings from Prudential's equity release index revealed that the significant amounts of property equity contrast with the current squeeze on retirement income being seen in today's volatile market – even in the face of the huge equity calculation, it found that the value of property equity belonging to homeowners aged 65 and over fell by £80.6bn between October 2008 and January 2009, with the average homeowner over 65 seeing the value of equity they have in their home fall by £21,377.

This proves, even in a downturn and even with falling house prices, if you have worked all your life to pay your mortgage your home is worth a lot more than you might think.

Keith Haggart, director of Lifetime Mortgages at Prudential says: "Every homeowner is being affected by falling property prices, but it's important to remember that many people, especially retired homeowners, bought their homes years ago and have benefited from growth in the housing market.

"They will in many cases not want to move home and in the current market the option of downsizing and raising money is less attractive when prices are falling and houses take longer to sell. The emotional wrench of moving house may be worsened by the financial loss of having to cut your price in a slow market. Equity release has an important role to play in providing retirement income particularly when other sources are under pressure."

Equity release is one option if you are looking to use some of your collateral, but there are always other options – if you have plenty of equity in your home, the door is always open for you to refinance, seek new finance altogether or invest in a healthy, successful savings vehicle.

The only thing you need to do if you are in a equity-rich situation is to get advice immediately. Your equity is your biggest asset, and one that should be able to see you right through your retirement. So make sure you don't needlessly lose any of it by not listening to a professional financial professional.

SOURCE: Prudential Equity Release, 22/04/09

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