Equity release is being used to boost early retirement funding by 10 per cent of Newcastle Building Society equity release customers, new figures have revealed.
According to the figures, at the end of February 2009, more than 10 per cent of customers said they were using equity release as a "guaranteed and cost effective way to fund their early years of retirement prior to future financial plans."
The building society found that, although the majority of equity release customers continued to use the money as a long term loan, a growing number were using the money as a short term loan, before using other retirement funds such as a pension.
According to Newcastle Building Society, the news suggests that equity release is a far cry from 'an option of last resort', which it is often seen as. In fact, the building society claims that the trend reflects the fact that the cost of living is soaring, while the returns on annuities and savings accounts are falling.
Commenting on the findings, Bob Mottershead, retail sales executive at Newcastle Building Society, said: "As we move further into recession and income from traditional retirement vehicles depletes, the potential for equity release to boost an individual's income in different ways is being realised.
"For the majority of people turning to equity release, the loan will remain a form of financial income until death. However, as the trend suggests, a growing number of young retirees can now make use of equity release as a short term stop gap prior to future financial plans."
Adding: "This use of equity release for the short-term offers a real way to fund early retirement for people waiting for inheritance or planning to downsize in the future."
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© Fair Investment Company Ltd