Equity release is on track for a record-breaking year
30 November 2021
Homeowners releasing more equity from their houses
It looks like 2021 is going to be a year for the record books in the equity release sector. Every three months the Equity Release Council publishes a quarterly review highlighting the activity, with its latest review of July-September (Q3) 2021 suggesting that UK homeowners over-55 are on track to access £4 billion from their properties this year – a higher amount than ever before!
During Q3, equity release customers accessed £1.5 billion of wealth that had previously been vested in their properties — up 19% from the same period in 2020. This also means that, for the first time ever, UK homeowners over-55 have released over £1 billion for four successive quarters, demonstrating the rising popularity of utilising equity release to make their goals financially obtainable.
Why is more equity being released than ever before?
We’re not surprised by the latest figures. We’re increasingly finding that our new and returning customers are able to release larger sums from their properties than they had previously thought they’d be able to. Largely, this can be put down to rising house prices; many of our customers are surprised to find out how much their much-loved home is now worth, meaning that lenders will be more willing to allow them to take out a larger loan, feeling confident that the property will be able to repay the debt if they later move into full-time care or pass away.
There’s also been what many commentators have dubbed a ‘middle class stampede’ towards equity release. People who own larger properties are increasingly turning to equity release to help them realise their dreams, be that buying an additional property, helping loved ones get on the property ladder or undertaking renovations in their current home.
The most popular products
The Equity Release Council’s latest report shows that, once again, drawdown lifetime mortgages were the most popular product. Drawdown lifetime mortgages are often popular with customers as you are able to take money (within a pre-agreed limit with the lender) as and when you require it, instead of accessing it in one lump-sum.
After this, the second most common way to receive payment was in a lump-sum, which is often preferable for customers who are going to use their money for something which requires a large upfront cost. An example of this would be helping a loved one get on the property ladder by contributing towards their deposit for a house. Ultimately, there are hundreds of products on the marketplace, giving equity release customers more choice than ever to find the plan that works best for them. However, having so many options can also create confusion, which is why it’s always important to work with a specialist adviser who will be able to identify which plans best fit a customer’s needs in an informative and understandable way.
What can equity release be used for?
Equity release is a means to an end, with homeowners over-55 using it to give them the capital to be able to achieve things they might not be able to otherwise. Many of our customers are utilising equity release for purposes, such as:
- To move house: Equity release can be a great way to afford an additional property or to move house altogether, especially if you don’t qualify for a traditional mortgage.
- To re-mortgage: Many homeowners over-55 are re-mortgaging with a lifetime mortgage to help them reduce or stop their monthly mortgage repayments.
- To help with homecare costs: There are many advantages to staying in your own home in later-life, but home-care doesn’t come cheap. Equity release might be an option for helping you afford to receive care in the comfort of your own home.
- To renovate: As we get older, we might need to make certain adjustments to our homes to enable us to live in them for as long as possible. Many of our customers release equity from their property for this purpose.
If you want to learn more about equity release and whether it might be right for you, then please get in touch.