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Equity release homeowner demand soars unlocking £1.4 billion from property

The amount of wealth accessed by homeowners in 2017 by using equity release has increased 55% over the year helped by more products.

Research from the Equity Release Council shows the demand from equity release buyers aged 55 and older is soaring with £1.4 billion unlocked from property in the first half of 2017.

Lenders have helped this growth increasing the number of new products by 34% from 58 in August last year to 78 product options today giving homeowners more choice.

Higher house prices and a lack of supply of suitable homes for the older homeowner to downsize has seen lending increase 55% from £0.9 billion in the first half of 2016 to £1.4 billion this year.

Family members can help first time buyers and home movers by releasing money using a lifetime mortgage and gifting the deposit to children and grandchildren as a deposit on their first home.

More competition reduces the cost

With more innovation from lenders there are 51 more product innovations on the market now than in 2014 and 225% more than a decade ago when there were only 24 product options.

The increasing competition is driving down the average equity release rates which have reduced to an all time low interest rate of 5.30% pa compared to 6.20% pa in January 2016 although the lowest rates start at under five percent.

Greater flexibility is offered from lenders such as Liverpool Victoria, Just, Aviva, More 2 Life and Aviva with 68% allowing equity release mortgage buyers to make ad-hoc repayments free from an early repayment charge.

Making repayments to an equity release plan can save a significant amount in interest charges accrued over the lifetime of the loan.

Not everyone needs the largest amount possible from their property and another useful feature called drawdown allows you can arrange an advance for the maximum loan but only take what you need initially.

You only pay interest on the amount you borrow knowing that you can drawdown amounts in the future when you need it and with a rate available at that time.

Older homeowners accessing wealth

Average age of new equity release buyers is 71.5 years old for drawdown plans and has remained similar since records began in 2014.

Benefits from equity release are better for older homeowners as the maximum loan increases with age and with less time to spend your money there is less rollup interest to pay back.

Older remortgage buyers are often forced by the lender to repay their loan at a certain age and rather than downsizing, they can agree a lifetime mortgage.

The Equity Release Council research has shown an increasing number of older homeowners aged 75-84 are unlocking the wealth in their homes.

Over the past year the number of new equity release buyers in this age bracket has increased from 23.2% to 25.1% of all drawdown plans.

Nigel Waterson, Chairman of the Equity Release Council said, such growth also comes at a time when the challenge of ensuring adequate financial provision for consumers in later life has never been greater.

The older population continues to grow and the shit away from final salary pension schemes will likely result in future retirees facing a greater savings shortfall in later life.

Buy-to-let landlords can increase their income in retirement by using a lifetime mortgage for their property portfolio as there are no interest payments to make.

It is therefore clear that the role of housing wealth in funding retirement will only become more important in the future, says Mr Waterson.

What are your next steps?

Talk to our London City Mortgage advisers if you are an older homeowner releasing equity from your property, we can recommend the lifetime mortgage to access wealth for home or garden improvements and holidays.

Learn more by using the equity release calculator, property value tracker chart and mortgage monthly costs calculator. Start with a free mortgage quote or call us and we can take your details.

At LCM our mortgage brokers can provide advice if you are a first time buyer, moving home, want to remortgage your existing home to a new cost effective mortgage deal or are a buy-to-let investor.

Use your dashboard to access online mortgage quotes, money off vouchers and start your mortgage application online 24/7 on desktop, tablet or smartphone.

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Equity release homeowner demand soars unlocking £1.4 billion from property

The amount of wealth accessed by homeowners in 2017 by using equity release has increased 55% over the year helped by more products.

Call for your free quote 0800 955 0058

  • IMPORTANT

    Equity Release may involve a Lifetime Mortgage or a Home Reversion Scheme. To understand the features and risks, please ask for a personalised illustration. Equity Release may affect your entitlement to means tested state benefits and will impact on the size of your estate. For Equity Release London City Mortgages charge a fixed fee upon completion of £695. For Mortgages a fixed fee is charged on application. Typically this is from £295 up to £495 for the services selected.

  • WARNING

    Equity Release - Equity Released from your home will be secured against it. Mortgages – Your home may be repossessed if you do not keep up repayments on your mortgage or other loans secured against it. Think carefully before securing other debts against your home. The information contained in this website is subject to the UK regulatory regime and is therefore intended for consumers based in the UK.

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