The Equity release council (ERC) has reported that £1.6 billion has been withdrawn through specialist equity release plans and with lending increasing by 16% on previous years, with 22,500 deals agreed, this is a record number since 2008.
Due to this, the value of borrowing now exceeds pre-recession peak by a third and the ERC found that lifetime mortgages, which allows people to borrow money against the value of their home was the most popular form of borrowing. With less than 1% of deals agreed being reversion plans, which is when people sell part of their home but carry on living there; this made it the least popular form of borrowing.
These figures suggest that for retired people, property is their biggest asset. The large increase in house prices also means that some people will have built up considerable equity.
Nigel Waterson, chairman of ERC said that the increase is ‘the latest sign of growing reliance on housing wealth as a key pillar of later life financial planning’.
‘Housing wealth is often people’s greatest asset. It makes sense for equity release to be on every homeowner’s checklist to consider as part of their retirement and estate planning. At the same time, it is not suitable for every circumstance, which is why professional financial advice and independent legal advice are essential.’