The Rise in Equity Release

Figures released by the Equity Release Council (which represents 95% of the equity release market) show that older homeowners unlocked £3.94 billion of property wealth in 2018 up 29% year on year. The market saw 46,000 new customers in 2018, an increase of 25% on 2017. The number of returning pension drawdown customers was also up 27% in 2018.

Releasing equity from property is clearly a growing market and we are seeing more demand for this, which is mainly due to people living longer, the rising property values and pensions being insufficient to meet expenditure needs. Some also use Equity Release to provide lump sums to their children to help them on the property ladder.

Although there are now more flexible Equity Release schemes on the market, this should be considered as a last resort. Planning is key for ensuring you have sufficient funds in retirement to meet your living needs and making pension contributions and utilising tax allowances can help you achieve your retirement income goal. Many do not make any provisions for their retirement until later on in life as other expenses such as mortgage repayment become the priority. However, the earlier you start saving for your retirement, the more income you will have available.

Of course, for some Equity Release is the only option available. For those who have insufficient pension funds and do not want to move and downsize, an Equity Release Scheme may be the best option.

Equity Release Risk Warning – While interest is not payable under a roll-up mortgage and there is a guarantee that you will never enter a negative equity situation, there is a risk that the equity within your home could be eroded significantly if not completely, impacting upon any beneficiaries of your estate. For those schemes where interest payments are required, if these are not maintained your home may be at risk.

If you are considering an Equity Release Scheme and wish to receive advice on whether this is the most appropriate option for you or if you are yet to retire and wish to review if your existing arrangements are sufficient, please contact the office and speak to one of our highly qualified Financial Advisers.