Equity release customers take cautious approach

Homeowners considering equity release are spending longer investigating product choices before making a decision, according to research from the equity release solicitors’ alliance (ERSA).

In a survey of over 600 clients, 40% said they spent over six months researching options before approaching an IFA; an increase of 27% from August.

In line with this, 83% of clients said they had consulted relevant literature and/or guides before making their decisions, with 20% consulting literature supplied by their chosen intermediary.

The research comes in the wake of concerns homeowners could be jumping into equity release schemes in a bid to find much needed cash as the recession bites.

Over the last year this could have eroded the worth in their properties as the value of loans taken out in equity release mortgages rose by 16% last year, while house prices suffered a simultaneous 25% dive.

There has been particular concern for older homeowners turning to equity release as a means of tiding themselves over. Many rely on savings to top up their pensions and have seen their incomes deflate dramatically following a cut in interest rates from 5.5% to 0.5%.

Claire Barker, chairman of ERSA, says: "By consulting the relevant literature, shopping around and then selecting an adviser who specialises in equity release, consumers are ensuring that they have made a thorough and informed decision.

"Equity release is not a decision that should be rushed into and customers are advised to seek both independent financial and legal advice before proceeding with a policy."