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Half of home owners factor in property value for their retirement

Property wealth passed £4 trillion in 2018 and half of homeowners see money invested in property as part of their retirement planning.

Research from the Equity Release Council shows 51% of homeowners aged 45 plus see money in their property as part of their retirement planning.

UK property wealth passed £4 trillion in 2018 and older households depend the most on this type of finance making up 40% for the over 65s and 47% of the over 75s wealth.

For older homeowners 44% feel equity release using a lifetime mortgage to access property wealth in later life is a more common way to manage money while 40% see this as a reality of aging.

The rise in house prices allows the equity release buyer to stay in their home while accessing the wealth in their property with a lifetime mortgage, using this for any purpose such as home improvements, holidays or giving to a family member.

Family members can also help home movers by access wealth using a lifetime mortgage and gift to a child or grandchild as an extra deposit to buy their second home.

Property wealth over £4 trillion

The Equity Release Council data shows property wealth has passed £4 trillion, the equivalent of £80,000 for every adult in the UK.

Investment in property has exceeded new mortgage debt every year since 2008 with three quarters of homes owned outright with homeowners making capital repayments increasing from £30bn in 2007 to £50bn in 2018.

Older homeowners are the biggest owners of property and have the largest proportion of their wealth in property with two thirds aged over 65 with £125,000 or more and one third have £250,000 or more.

Across the UK property represents 35% of average wealth compared to those aged 65 plus at 40% and among the over 75s this increases to 47%.

The rise in property wealth shows the advantage for first time buyers to get on the property ladder as a home would become an important part of their future finances.

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.

David Burrowes Chairman of the Equity Release Council said, ageing population and changing retirement landscape means people are increasingly thinking of property as a multi-purpose financial asset.

Property is often a person’s single largest asset and makes a significant contribution to homeowners’ personal finances as well as providing a place to live, he says.

Property still an untapped resource

Of those aged 45 and over 51% said it was important for their later financial plans, 47% said it was a nest-egg for unexpected expenses and 24% said it was a way to support family while they were alive.

Only 4% of the over 65s have used property wealth to support themselves in the last year while 3% have used it to support friends and family.

For those homeowners aged over 45 almost two thirds see the wealth invested in property as part of their inheritance plans whereas for those under 45, they see this fulfilling multiple financial roles.

About 24% say they would be comfortable with having a mortgage if the benefited from it including 21% who are currently mortgage free.

In the first instance homeowners are more likely to consider downsizing rather than equity release with 75% of those aged 45 to 64 and 61% of those aged 65 plus.

There is a resistance to moving home in later life with 72% of those over 45 wanting to live in their property for as long as they can rising to 77% for those aged 65 to 74 and 89% of those aged beyond 75.

Older remortgage buyers are often forced by the lender to repay their loan at a certain age and rather than downsizing, the equity release buyer can agree a lifetime mortgage to allow them to stay in their home.

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 to improve your quality of life or reduce inheritance tax owed by your beneficiaries.

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.

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


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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.

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