Families miss out as equity release rises
Some people are even using the cash to invest on the stock market in the hope of turning it into an even bigger fund. These days, that's almost like putting it on Number 7 down at the greyhound track.
The plan is usually that those who own their house outright sign up for equity release and then receive a lump sum or monthly income with the added benefit that they can stay in their home until they day. Then it's flogged and the debt cleared.Big windfall
The big problem here is that any surviving family members who thought they might be in for a bit of a windfall when good ol' mum and dad shuffle off, are in for a rude shock when they realise the money's all been spent.
Hence, the controversy.
There is also the matter of interest rates under equity release, which are between 6% and 7.5%, typically a lot higher than regular mortgage rates.
But that hasn't deterred thousands of people aged 55 and over going down this road and more than 4,100 homeowners did just that between July and September this year releasing an average of just under £50,000 each – around £206million total – in equity, according to the experts at SHIP, the industry body that looks at such things.
They say those numbers represent an increase of 10% on the previous three months in the amount of people looking for taking equity release
The fly in the ointment here is that thanks to poor savings interest rates, a fall in pension payouts and inflation, the money from equity release isn't necessarily being used to fund cruises around the fjords, because it's needed just to pay the bills.
And that is not what's supposed to happen.