Equity release 'one of many options'

By Jonathan Dawes, Fri 26 Sep 2008 - Published in Mortgages

Equity release should be considered as well as other possibilities as a source of retirement income, it has been claimed.

A principal consultant of banking at Defaqto said that equity release - also known as lifetime mortgage or home income plans - spoke after consumer watchdog Which? said it should be used only as a last resort.

The consultant said that in a time of "financial shocks, inadequate pension provision, low annuity rates and burgeoning levels of personal debt, it seems somewhat hasty to arbitrarily downgrade one of the possible solutions".

One of Which?'s suggestions was to downsize to a less expensive home.

The Defaqto consultant said that while this would suit some people, income tax liability and entitlement to means tested benefits also needed to be considered.

Age Concern recently said that half of pensioners are struggling financially and said the government's Pension Credit system is failing.

It called instead for a new system of automatic payments as soon as possible, stating that there are "deeply ingrained barriers to claiming benefits".

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