Younger homeowners expected to release property equity in 2020

Average age of equity release borrowers expected to fall 

The average age of new equity release customers in the first half of last year was 70 for new drawdown plans and 68 for new lump sum plans. However, a survey by equity release lender Canada Life found that nearly 40% of advisers expect the average ages of borrowers to come down in 2020. 

The key reasons triggering younger borrowers 

Two key reasons are behind the expectation that younger homeowners will look to release equity from their property this year: 

• Rising property prices – and helping children and grandchildren onto the property ladder: The prohibitive costs of houses for many first-time buyers mean more over 55s are looking to help the next generation get a foot on the property ladder, at a time when it is of most use them. Increased life expectancy means waiting for an inheritance is no longer a viable means of entry onto the property ladder for many people when they need it most, for example when they have young families. Equity release can enable parents and grandparents to gift money to their children and grandchildren whilst staying in their own home.
• Refinancing interest-only mortgages: Nearly 700,000 interest-only mortgages are due to mature over the next seven years. Unless the homeowners have made other provisions for paying off the loan, they risk losing their house or having to downsize to repay their debt. Equity release can enable them to use the equity in their property to clear the debt so they can stay in their home.

The need for expert equity release advice

Taking out an equity release plan at a younger age can, however, have long-term implications if you don’t repay the interest on your loan. ​“The longer you have an equity release plan, the more interest you can end up owing on it, so getting expert advice is even more important,” commented the director of 55+ Equity Release, Jan Johnson. ​“If you’re thinking of taking out an equity release plan when you are still in your 50s or 60s, it’s even more important to get expert, honest advice to explain to you how rolled-up interest works and what this could mean in the long term.

“Our advisers will always talk you through the pros and cons of equity release in plain English, so you fully understand the consequences of any decision you make. The requirement for you to have independent legal advice will also help safeguard your best interests.” 

If you have an interest-only mortgage that is due to mature, or if you want to help children or grandchildren onto the property ladder, our advisers will be able to help you weigh up the different options available to you.