Equity release to help family get on the property ladder

5 May 2021

Getting a foot on the property ladder 

To put it simply, houses in the UK have never been more expensive. The Office for National Statistics cites that by August 2020 the average UK house cost £239,000 – £6,000 higher than the previous year. What’s more, is that house prices haven’t risen proportionately to income, with Schroders reporting that houses have rarely been more expensive relative to earnings than they are today in more than 120 years’. The same report also found that the problem was particularly heightened in London and the South East, with affordability being worse for women in comparison to men. 

These trends show that many people who want to get onto the property ladder have been increasingly unable to. This is particularly bad for young people, with the Local Government Association finding in 2019 that 11% of those born in 1996 owned their own home, compared to 21% of people born in 1976 when they were also 22. Once you’ve got a foot on the property ladder, it does become easier to move up – however, due to the rate at which house prices are currently rising, this has become increasingly difficult.

Family funds

The issues that many families throughout the UK are facing when trying to get on or move up the property ladder is causing buyers to turn to their family to help them increase the size of their budget. A report by the Department for Communities and Local Government noted that almost a third (27%) of first-time buyers had part of their deposit gifted to them by friends and family. 

Whilst providing a lump sum to help friends and family might be possible for some, for other parents and grandparents, parting with their hard-earned cash can be a little more complicated. This could be due to other financial commitments, day-to-day costs or even the possibility of long-term care in the future, making every penny count.

How equity release can help 

If you want to help your loved ones get on the property ladder, but do not currently have the cash to do so, equity release could be one option for you. Equity release enables you to free up some of the capital in your home; what’s more, you can continue to live there and with a lifetime mortgage you retain 100% ownership of your house. You can choose to receive the money you unlock in either a lump sum or in instalments, only having to repay the loan when you choose to sell your home or move into long-term care. What’s more, some plans allow you to make interest payments or repay the debt as you go along, which will minimise your outstanding balance when get to the point of repaying your loan.

Increase in demand for equity release to help friends and family 

We’re seeing a rise in the number of enquiries received from homeowners over 55 who want to use equity release to help their loved ones get on, or progress up, the property ladder. Jan Johnson, our Founder and Managing Director, stated: We’ve been really busy with enquiries from homeowners who really want to help their loved ones own their own homes. 

With the government’s extension of the stamp-duty holiday and their announcement of a new scheme aimed at making 5% deposits more accessible once again, it’s no wonder that so many people are jumping at the chance to see their relatives purchase their first house, or move up the property ladder. If you’re a homeowner over 55 then releasing equity could be a way to help friends and family out; if you want to find out whether this is the right option for you, then one of our advisers will be on hand to help with a no-obligation initial consultation.”

If you want to find out whether you could use equity release to help your friends and family, then please get in touch. 

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