If you are just starting your retirement and your finances aren’t looking as healthy as you’d like, equity release can be a great way of topping up your income. Many people find that their pensions will leave them with a shortfall compared to the monthly income they were used to when employed.
Government figures for 2020 show that the average weekly pension income where the head was under 75 was £370 and if they were over 75 the figure fell to £302. This is why thousands of people choose to use the equity in their home, their most valuable asset, to help improve their financial situation and make retirement a really positive stage in life.
The Equity Release Council’s (ERC) Spring report found that the average equity release customer drew the equivalent of more than seven years of retirement income from their home in 2021. Customers who choose equity release withdraw £125,000 on average as a single lump sum or in incremental ‘drawdowns’.
UK property wealth reached a record £5.2 trillion by the end of last year and the equity release market is growing. The ERC reported that lending activity for 2021 was six times greater than in 2011 (£4.8bn vs. £789m) with product choice having more than trebled in the last three years alone (665 in Jan 2022 vs. 202 in Jan 2019).
An equity release plan can help you reduce your monthly outgoings by replacing a regular mortgage with a plan which doesn’t require any monthly payments. The money you owe your lender will be paid back when you have died or move permanently into a care home.
David Burrowes, Chair of the Equity Release Council said: “After years of putting money away in bricks and mortar, older homeowners are turning the tables and taking funds from their homes in order to boost their retirement income, meet one-off costs and gift a living inheritance to family.
“With £1 million added to the value of UK housing every minute last year, the options afforded by property wealth will feature in many people’s thoughts as they make financial plans for the future.
“The equity release market’s return to growth is part of a wider pick-up in later life lending activity, and the flexible design of modern lifetime mortgages gives customers more ways to manage their finances and access life-changing sums of money at a lower cost.”
:: Use our Equity Release Calculator to work out how much cash you could release.
It is important to take expert advice on equity release before deciding whether it is right for you. Contact us to find out more from one of our highly trained advisors.