Freeing up funds or releasing money tied up in your home
For some people in the future using their home to fund their retirement is likely to become more commonplace, whether that’s by downsizing to free up funds or releasing money tied up in their home through products like lifetime mortgages.
Equity Release has definitely had its fair share of bad press over the years and it’s fair to say that there are people out there who were put off by some of the stories about who would have benefited from that type of product.
Over the last couple of years, the demand for Equity Release has grown dramatically due to the flexibility introduced, interest rates dramatically reducing and property prices rising. With day to day living more expensive coupled with people underfunding their retirement throughout their working lives we are starting to see people use their property to top-up their income.
Homeowners could release some of the equity from their property to top up their retirement savings, through a process known as equity release. Using equity release for retirement income isn’t an equal replacement for pension savings, but if you’ve got a shortfall, then releasing money from your home may help you reach your retirement goals.
Analysis has highlighted homeowners in 53% of areas in England & Wales could access more from the value of their home than is saved in the average pension pot (£61,930) by using equity release, according to analysis and based on median local house price data from the Office for National Statistics (ONS).
Homeowners in England and Wales could release on average £72,988 worth of equity from their homes, an average increase of £14,000 in just five years due to a 24% increase in median house price values since 2016.
Ongoing house price growth has led many homeowners to consider the role their property might play in their long-term financial planning. One in seven pre-retired over 50s (16%) plan to use their property wealth to boost their finances via products like lifetime mortgages, a type of equity release, or via downsizing. However, an additional 13% said a significant increase in the value of their property could also persuade them to do so.
In recent years, we have seen house prices increase to the extent that they will have become the most significant asset available to many UK homeowners. The average UK property price has hit a new record high of £272,992, with growth now at 15-year high.
 Refers to average an pension pot of a pre-retired person over 50. Opinium survey of 2160 UK Over 50s in the UK who have not retired between the 9th and 13th August 2021
 Office for National Statistics, House price statistics for small areas in England and Wales: year ending March 2021, Nov 2021
 The Halifax House Price Index (IHS Markit) November 2021
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR MORTGAGE IS SECURED ON YOUR HOME, WHICH YOU COULD LOSE IF YOU DO NOT KEEP UP YOUR MORTGAGE PAYMENTS.
EQUITY RELEASE MAY INVOLVE A HOME REVERSION PLAN OR LIFETIME MORTGAGE WHICH IS SECURED AGAINST YOUR PROPERTY. TO UNDERSTAND THE FEATURES AND RISKS, ASK FOR A PERSONALISED ILLUSTRATION.
EQUITY RELEASE REQUIRES PAYING OFF ANY OUTSTANDING MORTGAGE. EQUITY RELEASED, PLUS ACCRUED INTEREST, TO BE REPAID UPON DEATH OR MOVING INTO LONG-TERM CARE. EQUITY RELEASE WILL AFFECT THE AMOUNT OF INHERITANCE YOU CAN LEAVE AND MAY AFFECT YOUR ENTITLEMENT TO MEANS-TESTED BENEFITS NOW OR IN THE FUTURE.
CHECK THAT THIS MORTGAGE WILL MEET YOUR NEEDS IF YOU WANT TO MOVE OR SELL YOUR HOME OR YOU WANT YOUR FAMILY TO INHERIT IT.
IF YOU ARE IN ANY DOUBT, SEEK PROFESSIONAL FINANCIAL ADVICE.