Re: Official "Warning" on Home Equity Release?
I'm a little bemused at the extremely bad press these products have gotten recently.
Firstly, let me point out that I have no connection with any of these companies and I have never sold or advised anyone about them.
From what I've seen these are interest-only loans that can be used by people who have a substantial ppr but very little income.
Much was made of the fact that the amount borrowed will have doubled after 10 years, but isn't that just the effect of compound interest?
The interest rate on one of the sites I looked at was 6.48% - this is a bit steep with base interest rates at 3.5%. However if the interest rates were lower, would this type of lending then be thought of as a good idea? If this is the case why isn't the outcry simply '...the rates are too high..' rather than saying that they are bad products, full stop?
Of course no one wants to be in the situation where they have to borrow money at that stage in their lives but, if someone finds themselves short of income, isn't this type of product preferable to living miserably and leaving a fortune to your next-of-kin (who presumably wouldn't help you out when you were alive!)?