Loans `may help` the squeeze of retirement

28 August 2008

People worried about debt problems plaguing their retirement years may want to consider the option of a loan from equity release, according to Fair Investment.

The company stated that some pensions are "pathetic" and an additional income is necessary to live a comfortable debt-free life.

Homeowners have the choice of two kinds of equity release schemes, it said, the most popular being a lifetime mortgage. This is a loan secured against the property which is repaid once the house is sold – an attractive choice as it means the owner still has possession of the house until death or a decision to move out.

Alternatively, the house can be sold to a reversion company or individual who allows the former owner to stay on as a tenant.

Sharon Bratley, chartered financial planner at the Fair Investment website, said: "Pensioners are finding it tough and releasing equity from property may be the only way to survive through retirement for some."

This week the pensions minister Mike O`Brien said some over-60s are missing out on support to which they are entitled.

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