What is driving the need for Home Equity Release?

Several social, economic and demographic factors are driving the growing need for Home Equity Release. The combination of falling birth rates and rising life expectancy means that around the globe the proportion of the population aged over 60 is rising rapidly.

There is a growing ‘Pensions Gap’ between what is available (from state-sponsored and private pensions) and what is required to fund people in their retirement. Already in many countries current pension and public health care arrangements are not sufficient. The cost of providing public benefits to people over the age of 60 will grow steadily as the proportion of the population made up of older people grows. (Source and more information: Seniors Money International)

Are there any codes of conduct for the Home Equity Release Schemes industry?

In a number of countries, such as Sweden and United Kingdom, the Home Equity Release market has reached a mature stage which has resulted in working out elaborate codes of conduct. For example, the Equity Release Council’s Code of Conduct sets strict criteria to which members must adhere, and which puts in place safeguards for consumers to ensure that they can have confidence in Equity Release Council members and their products and services. (Source: Equity Release Council).

What are the options for someone deciding to opt for a Home Equity Release Scheme?

The scope of services in the Home Equity Release Schemes market is very diverse and differs from country to country. Not only are the services known under different names in different countries, such as Mortgage Pension (Hypotekspension) in Sweden or Reverse Mortgage (Hipoteca Inversa) and Annuities Estate (Renta vitalicia inmobiliaria) in Spain, but also there is a wide range of options for every specific individual to choose which is the most suitable option for them. For example, in Spain there are more than 18 financial institutions providing the Home Equity Release services. (Sources: Svensk Hypotekspension, Óptima Mayores)

Who can use the Home Equity Release Schemes?

The Home Equity Release Schemes are designed for the elderly in possession of a home. The age conditions, however, change by country and by service. For example, the Equity Release Council in UK has set the minimum age at 55 years old, while the services provided by Swedish Hypotekspension’s and Just Retirement, for example, are only offered to those aged 60 or above. In Spain the minimum age is different for different services. For Reverse Mortgage it is 65 years, while for Annuities Estate it goes up to 75. The same way are varying other conditions. (Sources: Svensk Hypotekspension, Óptima Mayores, Equity Release Council, Just Retirement)