Retirement Income From Property Increases May 27th, 2010
Over the course of the past few years, a combination of bad press, poor investment returns and employers closing company schemes has meant that many people now do not have the adequate retirement income they need to live on form their pension alone.
As a result of this, many individuals are now turning to alternative methods to provide an income for themselves in retirement and either buying property or using the equity in their own home is becoming a large part of this planning for many approaching retirement age.
New figures from the Council of Mortgage Lenders (CML), show that there has been a significant increase in the number of people taking out a buy to let loan and building themselves a property portfolio to provide them with rental income in retirement.
The other main use of property to provide retirement income is through equity release loans and lifetime mortgages. These allow people to withdraw the equity from their home in the form of a loan, without the need for monthly loan repayments, with the interest on the loan being rolled up on the original amount.
Despite the fact that the rest of the housing and home owner loan market has seen a significant reduction in new business since the onset of the credit crunch, equity release loans have enjoyed continued success, with only a slight dip in new loans, compared with a 60 per cent drop in new home owner loans since 2008.
Jon King, managing director of Hodge Lifetime Mortgages commented on the changes, he said “More people are now looking at how their homes can provide an income for them for retirement. While the equity release market has witnessed a slight decline since 2008, it has been nowhere near as significant as the fall in gross mortgage lending during the same period.”