Investments News

Consultation key for equity release schemes - 22/05/2007

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Anyone looking to invest in their retirement by turning to equity release schemes would be well advised to consult those around them before committing to any decision, a specialist financial planner has urged.

Alec Ruthven, director of A M Ruthven & Associates Ltd, explained that liaising with relatives, who might stand to inherit from the investment, and solicitors was crucial to ensure comprehensive understanding of the process.

Equity release schemes, which can involve lifetime mortgages and home reversion plans, can help people fund their retirement, but Mr Ruthven urged people only to consider the option as a "long-term" investment.

"Some lenders have penalties attached, particularly in the early years . It's something to look out for," he explained.

"I certainly wouldn't go into a scheme with the thought that they're going to start jumping around from one product to another. I think you have to take it as a long-term thing and then review it in the future."

A liftetime mortgage allows full ownership of the property and either a lump sum or a monthly income after raising a mortgage against it.

Home reversion plans, on the other hand, see part or all of the property sold off in return for payments, becoming a tenant in the process.

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