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Equity release lending to home owners doubles to reach £870m

In the first quarter of 2018 housing wealth accessed using equity release has doubled in only two years with nearly £10 million a day.

Data from the Equity Release Council shows £870 million of lending to homeowners aged over 55 in the first quarter of 2018, increasing 120% from £394 million borrowed from properties in 2016.

The number of equity release mortgage buyers for quarter one were 10,195 a rise of 197% compared to 5,175 in the same period two years ago.

This trend shows how lifetime mortgages have become more widespread as a method of releasing cash from your home for the over 55s, using their property assets to meet their financial needs.

David Burrowes, Chairman of the Equity Release Council said, it is clear that equity release has become an increasingly useful and flexible financial planning tool for older homeowners.

Increasing demand and product choice

Few homeowners consider home reversion plans where you assign ownership of your home to a provider and demand for equity release unlocks £9.7 million from property per day increasing from £4.3 million during quarter one of 2016.

Older remortgage buyers can be forced to repay their loan after retirement and rather than downsizing, they can turn to equity release using a lifetime mortgage.

By not downsizing, this could reduce the supply of properties on the market, making it harder for first time buyers to purchase their first home.

As a result lenders are increasing product options available to homeowners rising from 69 in January 2017 to 86 in January 2018.

There is greater competition and innovative product features of lifetime mortgages with 70% offering buyers the choice to make ad-hoc, penalty-free voluntary or partial repayments of their loan.

Find out more about the products features for a lifetime mortgage and the current interest rates to release cash using this link:
Free equity release quote for product features and current interest rates.

A lifetime mortgage is a useful alternative for the older remortgage buyer if they are forced to repay their conventional loan at a certain age, rather than downsize.

Homeowners can improve their quality of life in retirement and buy a new house with equity release either to downsizing and release cash or trading-up to a more expensive home on the coast or in a national park.

David Burrowes said, equity release provides financial help for consumers including some looking to pay off interest only mortgages, home improvements or adaptations and fund social care needs.

Trend for increasing use of equity release

The value or lending have increased from £2.15bn in 2016 to £3.06bn last year and the Equity Release Council expecting £4bn of retirement funding for older homeowners over the course of this year.

Drawdown lifetime mortgage products are the most popular choice with 68% of homeowners compared to 32% using lump sum products to access cash.

These products let you drawdown cash over time initially paying interest on the amount you take with a reserve available and only paying interest on this when you take cash in the future.

For drawdown the average amount taken initially is £64,797 compared to lump sum lifetime mortgages with an average amount of £96,483.

Lump sum and drawdown products include useful features for repaying the mortgage early with 10% of the loan free of the early redemption charge (ERC) each year if you think you may receive an inheritance in the future.

David Burrowes said, given that nearly 70% of all homeowner equity belongs to households aged 55 and over, it is inevitable that housing wealth will need to be used to help get the next generation onto the housing ladder.

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.

What are your next steps?

Our London City Mortgage advisers can recommend the product and specialist legal advice if you intend to access cash as a lump sum or drawdown.

See what the maximum amount you can release from your home when you downsize or buy a more expensive home using this link:
Free equity release calculator to show the cash you can release when relocating your home.

At LCM our expert advisers have access to the whole market to find products whatever your needs. Learn more by using the property value tracker chart and mortgage costs calculator.


Mortgage Best Buys

These are examples of mortgage products we can approach with many more offering interest rates and flexibility to meet your needs.

1.19% Fixed Rate
60% Loan to Value
£999 App Fee
2-Years Time
Reverts to 3.59%
1.17% Fixed Rate
60% Loan to Value
£1,025 App Fee
Until 31/09/2022
Reverts to 3.59%
1.18% Fixed Rate
60% Loan to Value
£1,034 App Fee
Until 31/10/2022
Reverts to 3.59%
1.16% Fixed Rate
60% Loan to Value
£1,525 App Fee
Until 01/11/2022
Reverts to 4.09%

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  • 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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