Many older homeowners using equity to help kids
April 17, 2010
Over the past couple of years many people have found it difficult to get finance of any sorts, from personal loans and credit cards to mortgages, and it appears that the situation is taking its toll on the nation’s elderly, with an increasing number of grandparents being asked for financial help by their grown up children.
According to a recent report a growing number of older homeowners have been taking money that is tied up in their homes in the form of equity so that they can provide more financial support to their grown up children or to their grandchildren.
Research has shown that many adults who now have their own kids are finding it difficult to cope financially without turning to their own parents, and in older to help their kids and grandkids many older homeowners are taking money from the equity in their homes. By using equity release to get this money older homeowners have been described as using their homes like cash machines.
Retired homeowners in the UK took out around £217 from the equity in their homes between January and March of this year, according to figures that were released recently. The average amount that was taken out was nearly £44,000, and the amounts being taken were up by around one fifth compared to the same period last year.
However, there are concerns about homeowners doing this, especially in cases where they do not tell their loved ones. In many cases the children or grandchildren of elderly homeowners think that they will inherit the property upon their death, when in actual fact it ends up having to be sold because an equity release was taken out on it.
One grandparent that released money from her equity said: ‘It’s so difficult for young people now. When I got married at 18, my husband and I were able to get a decent house for £2,500 even though he was only making £12 a week.’
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