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Families come first: a third of pensioners use equity release cash to help loved ones

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Retirees are increasingly putting their families first as they seek equity release plans and personal loans to help out struggling family members, according to a recent report.

Sales of equity plans and total lending have soared, with 31% of pensioners using their property wealth to help their families in the first half of this year, compared to 23% in the same period of 2011.

The total value of housing wealth realised has soared to £446m. Over the same period the numbers using property wealth to clear their own debts dropped to 25% from 31%.

Dean Mirfin, Group Director at Key Retirement Solutions said “Retired homeowners are putting families first as the recession continues to squeeze finances across generations.

“Helping out family is a powerful motivation for elderly homeowners and it is striking that they feel financially secure enough to help families before themselves and are under less financial pressure from their own debt.”

Total lending in the first six months increased 15.7% to £446.21m from £385.68m. Key Retirement Solutions say that this figure ‘would have topped £630 million if £185 million of untapped drawdown funds which have yet to be released are added in’.

Plan sales rose 10.7% to 9,288 in the six months compared with 8,387 for the same period of 2011.

Drawdown sales made up 65% of total sales in the first half compared with 55% for the whole of 2011 in addition enhanced sales, both drawdown and single advance, made up 9% of the market.

Improvements around the home remained the most popular use of equity release cash with 58% of customers using some or all of the cash to make changes to their property. 30% of the cash is used to fund holidays.

Only 16% used money to pay regular bills while 18% used it to clear outstanding mortgages.

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