Is equity release the right option for easing family financial pressures?

Reduced to a personal level, the financial turmoil being caused by the continuing global economic turmoil is causing parents and grandparents to look upon equity release as not only a solution to their own money worries, but also the answer for helping out family members who are struggling to keep their heads above water in these financially austere times.

A survey of 1,142 adults by the Equity Release Solicitors’ Alliance (ERSA) discovered that 61% of parents and grandparents said that they would consider making using equity release to help out their children or grandchildren. 53% said they would help with housing deposits, 36% would help with rent or mortgage repayments, and 31% said they would assist with university fees.

The research also found that 70% of parents and grandparents would release more than £10,000 from their property to help out a family member in need, and 4% said they would release more than £100,000 if needed. Conversely, younger family members are also considering equity release to help their parents with their retirement.

Roger Southam, Chairman of property management company Chainbow, said: “The bank of mum and dad, and even grandma and grandpa, has arisen since the beginning of the downturn in 2008. What is dangerous about this trend is that the elder generations are not taking into consideration the future cost of their healthcare, their longevity as opposed to generations before them, and the viability of their own pension plans.

“Since the late 1970s, the British public has been encouraged to invest in Bricks and Mortar. However, these individuals need to be more consciousness of their future savings, nest eggs and rainy-day fund. Otherwise younger and older generations can potentially fall further into debt which will impact on the British economy as a whole. We do not want to be faced with international bail-out and country in higher debt.”