Two thirds of financial advisers failed to pass all of Which?’s benchmarks for equity release advice in a recent set of Which? mystery shops.

The consumer watchdog's researchers visited 40 advisers and found that only a third of them met all its benchmarks for good advice.

Overall, five out of 12 equity release specialists passed the Which? test. It also found that eight of 28 financial advisers met the Which? benchmark also.

It says 23 advisers tested failed to carry a fact-find and seven didn’t even ask about the researcher’s income. Some advisers didn’t mention how quickly the debt would grow or discuss the effect of compound interest. One IFA said there was no chance of using up all the equity in the customer’s’ home “unless you live to 150”.

Which? editor Martyn Hocking says: “Which?’s investigation has uncovered some major flaws in the equity release advice process. We’d like to see a tightening up of the advice process.”

The equity release body, Safe Homes Income Plans warns that people have to remember what has been excluded from Which?'s as well as what has been included.

Director general Andrea Rozario says: “Although there are estimated to be over 7000 people who have taken the specialist equity release exams, the fact that Which? has found issues with the processes of some of the 40 advisers reviewed shows there is absolutely no room for complacency."

If you are considering using your home's equity as means to fund your retirement, make sure your adviser is fully qualified, has customer testimonies and can prove that they are asking all the right questions when it comes to good equity release advice.

SOURCE: Which?, SHIP, 23/07/09

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It's no surprise that the downturn and falling house prices have led to a drop in the number of people taking out equity release products – but they are still a valuable and useful way for older people to unlock equity in their home.

While over the last three months figures show some signs of renewed optimism, the market volume of equity release schemes sold was down by 22% from the same time last year – 5328, down from 6864 in mid-2008.

The number of new equity release customers did rise by 5% from 5074 in March to 5328 at the end of June 2009 as more consumers turned to equity release to boost their pre and post retirement finances. The number of drawdown mortgages, loans where you can take equity out of your home as and when much like a current account, also increased by 14% over this period. However, while the number of sales increased, the value of products sold over this period fell to £232.9m from £245m.

Andrea Rozario, director general of equity release trade body Safe Homes Income Plans, says: "While the equity release market is still suffering along with the mainstream mortgage market, it is encouraging to see that the equity release market is starting to see evidence of some positive movement. The quarter on quarter increase in the number of plans shows that consumers are once more starting to believe in the UK housing market.

"There remains a clear need for equity release products – especially in the current economic environment. We remain realistic yet positive about the next quarter's results, and expect to see exciting market and product innovations as companies adapt to meet the changing needs of their clients."

Dominic Fraser-Smith, group product manager for UK Life, Aviva, says: "These figures are encouraging and we believe they could herald the first glimmers of a recovery for the UK equity release market."

Fraser-Smith says the increase in drawdown mortgages was particularly encouraging: "The flexibility offered by this product is ideally suited to how many of today's consumers want to access their housing wealth and we expect that its market share will continue to increase in the future."

SOURCE: SHIP, Aviva, 17/07/09

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More older people may have to look to equity release as their jobs and pension plans are hit by the continuing recession.

Workers aged 50 plus are afraid they will be forced out of their jobs due to their age and worried that their retirement incomes will be decimated by the recession, new research from Help the Aged and Age Concern has revealed.

More than one in four over 50s questioned in a recent survey by the charities fear that their age will see them forced out of jobs if their employer decides to reduce staff numbers due to the economic downturn. Recent figures showing that over the past year the number of unemployed people aged 50 plus has risen by nearly 50%.

Many are also seeing their pension prospects hit hard by the downturn: the charities also found that nearly half of respondents said they are less confident than six months ago that their pension and savings will provide them with a comfortable standard of living in retirement.

Michelle Mitchell, charity director for Age Concern and Help the Aged says: "These figures paint an extremely bleak picture for millions of over 50s whose working lives are at risk of being cut short by the recession. Those who do lose their jobs will face significant obstacles to getting back into work, leaving them financially vulnerable as they approach retirement. For many over 50s, one of the lasting legacies of this recession will be a retirement blighted by poverty."

If you are worried about your earning potential or the size of your pension, you should be considering investigating equity release. Equity release allows you to take some of the equity in your home and spend it how you wish. This might be for home improvements, medical care, your family or the holiday of a lifetime.

It's not for everybody, but there are many equity release products for a huge variety of borrowers. To see what you could benefit from, talk to a qualified mortgage adviser.

SOURCE: Age Concern, 27/05/09

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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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A new report has found that more than a quarter of those between 55 and 64 years of ageo are relying on their homes or property to help fund their future retirement.

According to uSwitch.com, almost 1.7 million pensioners are relying on property to fund their old age at least in part. Sadly, it says this group alone has already seen just over £46bn disappear from their retirement fund in just 12 months as the average house price has dropped by nearly £30,000.

This means more people will be looking to unlock secured equity from their home, in the form of a remortgage, a secured loan or even equity release.

But those who are approaching retirement age are concerned for their future plans – just over one in ten 55-64 year olds think that they cannot afford to retire. Worryingly, 18% of over 65s who are still working say that they cannot afford to retire either.

The implications of not saving enough or soon enough are clear – retirement could be delayed or even put on hold permanently, raising the spectre of working far beyond 65. Of those who have already retired, 20% had to delay their retirement – 8% of these had to carry on working for a further 5 to 7 years, says the website.

Ann Robinson, director of consumer policy at uSwitch.com, says: "Falling house prices coupled with the stock market crash and low savings rates have combined to take the wind out of the sails of many of those approaching retirement. The economic situation will hopefully right itself in time, but unfortunately time is a luxury those who are a few years away from retirement don't have.

"There isn't an instant solution, but that doesn't mean people should just bury their heads in the sand. They should still be planning and making sure that they are on the best financial footing possible.

The only way you can be more sure of your golden years is to act now. Talk to your financial adviser right away about making the most of your home, your savings and your pension. House prices will rise again, there is no doubt, the key is making sure you are as financially stable when the time comes to take advantage of the chance.

SOURCE: uSwitch.com, 02/04/09

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New research has found that equity release is used by the elderly mainly to improve their home or pay off their debts – proving how flexible secured borrowing can be.

Key Retirement Solutions has found that equity release borrowers in the North are also most likely to spend the cash released from their home on improving them 69%, followed by the North West 67% and Yorkshire & Humberside 66%

It also found that the North and London are the most generous regions as 16% of those who opt to release equity in their home give some of the cash released from their homes via equity release as a gift to their families. But then it appears those in the North are also more focussed on their lifestyles, as nearly two thirds (58%) spend the money released from their home on holidays.

For those people with a property value of less than £200,000 home improvement is their biggest priority, which comes before repaying debts or mortgages. Looking at all property values those which stand at less than £200,000 are more likely to spend the cash on a holiday than any other value of property.

KRS also found that, as can be expected, those with a property value of more than £750,000 are the most generous, as a quarter give some of the cash as a gift to their family.

Dean Mirfin, KRS business development director says: "The most popular reasons at all ages do not come as a great surprise, being home improvement, repaying debt and holidays. Whilst few appear to release equity for an extra monthly income, many incomes are directly improved by the repayment of debt.

"The figures continue to show, that for the many thousands in or approaching retirement, the need and desire to release equity is targeted at those outcomes which will have a dramatic, positive, effect on their standard of living."

If you think you could benefit from using equity in your home in your retirement years, talk to your mortgage adviser today about the potential that is sitting in your home.

SOURCE: KRS, 09/03/09

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The latest drop in bank base rate has meant that savings accounts are paying out very little to elderly people who need the interest to survive – meaning equity release demand is on the rise.

Equity release is a form of secured lending where an elderly person's home's equity is released so as they can enjoy their lives and clear their debts later on in life. Many elderly people own most of or all of their homes so equity release has the potential to unlock trillions of pounds all over the UK.

David Cooper, marketing and distribution director at Just Retirement says: "The latest news of a further reduction in the base rate will hurt retired people living off their savings. The extent and speed of rate reductions since August may have defeated attempts at planning and left pensioners struggling to cope with a rapid reduction in income from their savings, especially once tax is taken into account.

"Simultaneous with loss of income, the newspapers report that food price inflation has risen to 9% for the 12 months to the end of February despite significant falls in the general level of inflation.

"Taken together these two factors could significantly damage the standard of living of pensioners who will now be seeking alternative methods to generate income from their assets. In many instances they may be forced to spend capital, thus harming their ability to return to normal even when interest rates eventually rise again. Equity release may be able to restore income levels either for those whose assets are already depleted or, when the time is right, those who could be left with insufficient funds over a period of time."

If you think its time to unlock some of your home's potential, talk to a mortgage adviser about what you can do.

SOURCE: Just Retirement, 06/03/09

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