The financial regulator has warned older homeowners to seek independent legal advice and consider all of their options before signing up to an equity release scheme to get a cash sum from their homes.
The regulator is meeting with groups representing older people today to point out the financial risks associated with the schemes, which are aimed at people aged 60 and over who have built up equity in the value of their homes.
Age Action Ireland, Alone, the National Council on Ageing and Older People, the Senior Citizens' Parliament, Active Retirement and the National Federation of Pensioners' Associations are among the groups that will attend the presentation by the regulator, which yesterday published a new booklet on the schemes.
It estimates that 2,500 people took out equity release products in the Republic last year.
Head of consumer information Sharon Donnery said it had received numerous queries from older people about equity release schemes and that it was often a particularly sensitive and difficult area for consumers.
Homeowners thinking about entering into such a scheme should consider renting out a room in their house, downsizing to a cheaper property or transferring ownership to a family member, the regulator suggests.
A type of equity release scheme known as home reversion, where homeowners sell a share of their house at a discount to a company in exchange for a cash sum, is unregulated because the sales are classed as property transactions. This means consumers cannot make complaints to the financial ombudsman.
An inter-agency group involving the Department of Finance, the Department of Justice and the regulator is now examining how these schemes may be regulated in the future.
The regulator warned that the amount of cash people receive for a percentage of their homes could be quite small. The booklet also warns homeowners that any lump sum or income raised through an equity release scheme could affect their entitlement to State benefits, while leaving the property for more than six months can trigger a sale.
