Cashing in kept me in my home by Finance News Bulletin

Published: 31/08/07

For 81 years, Dennis Halliday has lived in the same home, surrounded by cherished mementos of his long career as a River Thames master boat designerPOLL: Equity-rich, cash-poor pensioners are increasingly cashing in on the worth of their home If you are, what option are you most likely to takeThis is Money has been named Financial Website of the day in recognition of its campaigning reporting

>> ReadBut despite still possessing a vice-like handshake that betrays his past line of work, his health is not quite what it once wasThough celebrating his 86th birthday nowadays, he is now confined to the ground floor of his house When he is not in hospital, he is heavily dependent on carers who visit three era a day and do everything from preparing his food to putting him to bedWhen his carers are not in attendance, Margaret Ahmed, his gently neighbour in Chiswick, west London, keeps a close look at on him

Margaret works from home and has an enduring power of legal representative, which means she can sort out Dennis's money should he be temporarily hospitalised and bills need payingDennis, who has never married, is an extremely arrogant gentleman and is determined to end his days in his own home 'My look after and father died here and I want to do the same,' he says He shudders at the thought of leaving into a care home or moving to a smaller home, but the care he receives is not cheap - £1,200 to £1,600 a month

It is an expense he is able to bear because he has just released some of the equity in his houseHe has done this by taking out an equity let go scheme - a lifetime mortgage These plans let anyone from the age of 55 to tap into the value of their home without having to put up for sale, move out, or make subsequent monthly interest payments in its place, interest charges are deferred until the planholder dies, when the capital borrowed and interest are repaid from the land

Lifetime mortgages differ from home reversion schemes - the other main shape of equity release product Here, a homeowner sells a piece of their home for a discounted cash sum When they expire, the slice goes to the plan companyEquity release crop are offered by many companies, including Northern astound, Norwich Union, Prudential and Standard Life

According to latest figures, sales of equity release schemes are steadily increasing The sector's trade body, Safe Home profits Plans (Ship), says that sales are running at £12 billion a day with more than 30,000 new plans put up annuallyYet ignorance about equity release remains extensive

According to Norwich Union, the sector's biggest player, more than 50% of Britons do not know what evenhandedness release isElizabeth Boardall, head of marketing for Norwich amalgamation's post-retirement crop, says: 'It is worrying that so many people are unaware of the basics of equity let go when it is now a viable alternative for many approaching, or in, retirement'The insurer has just shaped a DVD for consumers who want to learn more Until Dennis saying his solicitor to update his will this year, he admits he was unaware of equity release

But once he told him that he was struggling with his care cost, he was referred to Angela Guylee of Blake Independent Financial armed forces in Barnsley, South Yorkshire, who specialises in equity releaseShe recommended that Dennis take out a lifetime mortgage with Cardiff-based provider Hodge Equity let go By releasing £150,000 of equity from his home, which is appreciated at £1m, and putting the profits into an investment bond topped up with private savings, Dennis has plugged the journal shortfall between his personal income, which comprises his state retirement fund, attendance payment and a small private pension, and the cost of his care cost and household billsCrucially, the equity released will not compromise any of his benefits, though if he had been in receipt of means-tested benefits such as pension credit, this would not have been the case

If his care fees rise, he has the option to draw down a further £100,000 Interest on the £150,000 loan will roll up at 65% fixedHowever, if he draws further funds, he will pay the speed that Hodge is charging at the time on the new funds - at present 6

89%Like all equity release products offered through providers that are members of Ship, Dennis's loan will never exceed the worth of his home, but interest charges rack up rapidly If Dennis lives another five years, his £150,000 loan will balloon to almost £207,500 If he lives for another ten years, that shape will be £286,800

Guylee says: 'Equity release products are not for everyone Indeed, the first obsession I urge clients to consider are to either downsize or take out a loan where interest is charged monthly rather than be allowable to roll up'• Ship provides general information on evenhandedness release at 0870 241 6060 or ship-ltdorg

Norwich amalgamation's DVD is available on 0800 404 7137 Advisers specialising in evenhandedness release can be found at unbiasedcouk

Financial Mail has also shaped a guide in association with specialist Key departure Solutions Copies are available from 0800 085 5755Select a loan term 12 months (1 day 24 months (2 existence 36 months (3 existence 48 months (4 existence 60 months (5 existence 72 months (6 existence 84 months (7 existence 96 months (8 existence 108 months (9 existence 120 months (10 years)Please select a type of insurance existence insurance Home and contents Car Breakdown services physical condition - medical physical condition - dental Travel favorite - dog favorite - cat GOThinking about investing in possessions This is Money has the best

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