In order to answer the question as to whether we will see Prudential equity release plans again we need to consider why equity release plans emerged in the first place and what they have to offer. Equity release allows you to raise funds from the value of your property. You and your spouse or partner retain the right to live at the property until you pass away or move out.
Essentially what you are doing is selling your home and then moving out later. For the retired over 55 individual or couple this can be a wonderful way to raise funds when they are needed. There are many reasons to choose equity release. The most obvious is that your retirement plan simply has not lasted as long as you thought or hoped it would. With the cost of living at an all-time high this is very common.
But, of course, you could just want to make your retirement a bit more relaxed. Or, perhaps you have always wanted to take an overseas trip and you have decided that this is the time.
Not all equity release schemes have been taken off of the market. In fact you have at least three companies that are major equity release providers. When you lose one provider there are often two more coming along the way or at least two more products to make it on the market. Whether Prudential equity release plans appear again or not, you are not being left out in the cold for your retirement needs. Instead, you have plenty of choices that have replaced the one product that is gone from the market right now. Let’s take a look at those options versus dwelling on the loss of one particular company’s product.
Lifetime Mortgages for Retirees
Under the name lifetime mortgages you have four products on the market right now. These are:
• Drawdown
• Roll-up
• Interest Only
• Enhanced
To start, rollup is the mainstream equity release. It is the one which all other lifetime mortgages are designed around. They are made for the person unable to make a monthly payment on the loan and who desires a large lump sum of cash to live out their retirement. You will see interest accrue onto the principle lump sum you took out. This lump sum and the interest are paid back once you die or decide to move out of the house the product is covering. Typically, payment is made with the sale of the home as most retirees do not have enough cash to cover the amount without a sale. You must be 55 years of age to take out one of these rollup products or any lifetime mortgage.
Drawdown is a definite change to rollup because you receive a smaller lump sum initially and then you take out money as you need it. Interest only adds up on the funds you have withdrawn from the account. This saves you money in the long run.
Enhanced is a version of the rollup scheme in every aspect, except it is a specialised mortgage to offer more money in a lump sum. You receive even more than the rollup plan or drawdown mortgage because your life expectancy is compromised. It might sound cold to say that illness in which death is quicker than most retirees is an advantage. However, in this case it is your ill health that can get you more funds because the loan is expected to be repaid quicker.
Interest only works like a rollup mortgage except you pay a monthly interest amount for as long as the loan is unpaid. Some products allow you to choose the amount of interest and make it a hybrid with a roll up in which any unpaid interest is rolled up into the lifetime mortgage. Most expect you to pay the full interest as it accrues each year.
If you do not appreciate these equity release plans in your situation, then consider a different choice in home reversion. This is an absolute sale of your house, but at least you get funds without a mortgage and interest accruing. For some this is a better option than having the burden of debt when they pass away.
Whatever scenario applies to you, you can see that the need for equity release plans is only going to increase. With this in mind it does seem likely that we will see equity release plans again in the form of Prudential equity release or at least from another company with products just as great.