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Equity release bailing out young adults



Grandparents equity releaseAround £424 million was taken out in 'equity release' products in the six months between January and June, as grandparents across the country took out money from their own home to bail out struggling loved ones.

The report by the Equity Release Council highlights the squeeze facing millions of younger people who simply cannot stay financially sound without help from 'the Bank of Granny and Grandpa'.

Equity release?

Equity release products allow individuals to take out money from their home that is repaid only when they die, although their debt typically doubles every 11 years.

A record 31 per cent of respondents in the report said their main motivation for doing so was to lend or give money to members of their family.

Compare this to five years ago when the most common reasons were to renovate their home, go on a holiday abroad or pay off their own debts.

However, times have changed and the on-going financial crisis has played a part in the "staggering" increase.

Cheap mortgage deals are now only available to those with a large deposit, resulting in many grandparents handing the money over to their children so they can put it towards a deposit for a home.

Older people may even have to fork out more in the not too distant future as rates are expected to be hit by further hikes.

They are also giving money to their grandchildren to help cover the cost of university fees. English students on undergraduate courses will soon be forced to pay tuition fees of up to £9,000 a year.

Warning

Debt charity the Consumer Credit Counselling Service urged older people to think about their own future before bailing out their children and grandchildren.

A spokesman said: "While equity release to help children or grandchildren get on the property ladder or pay for their education can be gratifying for many, it can be a huge burden for others.

"There are a lot of costs associated with getting older, and it is crucial that these are factored in to any decisions about equity release."






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