Over-55s are increasingly turning to the partial sale of their homes through equity release to fund their lives - often as a retirement option.
According to statistics released by the Equity Release Council, equity release activity in the second quarter of 2015 reached £384.3 million - the highest level since records began in 2002.
More people turning to equity release to fund lives
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Over-55s are increasingly turning to the partial sale of their homes through equity release to fund their lives - often as a retirement option. According to statistics released by the Equity Release Council, equity release activity in the second quarter of 2015 reached £384.3 million - the highest level since records began in 2002. A spokesperson for the Equity Release Council told Money Observer the rise might signify more people looking to take advantage of quickly rising house prices without having to move out of their family home. This represents a rise of 18% since the second quarter of last year. To put this figure into perspective, it suggests homeowners aged 55 and over withdrew £4.2 million of housing wealth every day between April and June. Equity release The number of people releasing equity in their homes is also gaining pace, with 5,414 new equity release customers in the second quarter of the year, representing a 11% increase on the previous quarter. Most equity release plans are lifetime mortgages - meaning you get a loan that doesn't need to be repaid until you die. However, the interest on the loan 'rolls up' and is added to the loan total, so the amount outstanding can increase very quickly and result in the lender claiming a percentage of your home much greater than you unlocked in the first place. Some providers will allow you to repay the interest periodically. Alex Edmans, head of retirement at Saga, says new mortgage regulation tightening affordability checks for banks means many older people can no longer get traditional mortgages. "This, and the fact that many people are now coming to the end of their interest-only mortgage term without a full repayment plan, has meant that more are turning to equity release as a viable solution to borrowing in retirement." Nigel Waterson, chairman of the Equity Release Council, says: "The last three months have been a landmark period for UK retirees and those approaching retirement, and equity release activity continues to grow amid a sea of change. "There is no doubt the pension freedoms have created more options for people to consider, but the appeal of tapping into housing wealth is on the rise as older consumers seek to make use of all the assets at their disposal. "Doom and gloom often surrounds discussions on retirement income, but while contributions to pension pots remain low, an entire generation of homeowners have been paying into property their whole lives, making it an asset that can transform their financial options beyond the age of 55." This article was written for our sister website Money Observer
Source Moneywise http://ift.tt/1MBaPSQ
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