Equity release funds around £1 out of every £90 spent by Britons in retirement, according to new research released today. 

The amount spent by homeowners using equity release in retirement could breach £4m this year, according to analysis by the Centre for Economics and Business Research (Cebr),  as growing numbers of homeowners look to unlock some of the wealth tied up in their property without having to sell their home.

Equity release is becoming an increasingly popular option for homeowners aged 55 and over wanting to boost their income, as it can provide a lump sum, regular income payments or a combination of both. Any money released, in addition to the interest that builds up on this, is usually repaid when the homeowner dies, or moves into long-term care, although plans approved by the Equity Release Council, the trade body for the sector, allow you to make partial or full repayments earlier if you want to. You can read more in our article Equity Release – what is it and how does it work? 

In 2021, equity release funded around £3 billion worth of domestic retirement spending, according to Legal & General and the Cebr’s The Equity Economy Report.

What is equity release used for?

Around 26% of equity release plans (£1.3bn) are used to fund single, big purchases such as home improvements, a new car, or furniture, while 17% of the money released is put towards medical expenses, the report found. Other popular uses include overseas travel and financial planning (£480m). 

Britons using equity release are expected to withdraw an average of around £170,000 from their homes within the next five years to meet rising living costs, according to the Cebr’s forecasts. The total amount of equity released from property is predicted to double by 2030 to more than £12 billion, as the average amount of equity released increases. 

Around 23,400 retirees have released around £1.53 billion in the first three months of 2022 alone, latest figures from the Equity Release Council show, a rise of 21% on the same period last year. 

Craig Brown, CEO of Legal & General Home Finance, said: “This shift reflects the boom in property values, which have made our homes such an important asset, but it also demonstrates how far the equity release market has come through the introduction of product innovations and how it has become a more suitable solution for a wider range of people. 

“The impact of the equity release market is more significant than just the spending power it gives to customers, it also makes a positive contribution to the UK economy.”

Getting advice on equity release

If you are struggling to meet the rising cost of living then releasing some of the value of your home may appeal, but you need to be fully aware of the advantages and disadvantages of equity release.

The proceeds from equity release may be put towards a wide variety of costs, such as paying off debts, covering care fees, or simply increasing your retirement income. You can find out more about exactly how equity release works in our equity release section

Remember that releasing equity from your home can have implications for tax, benefits, inheritance and your long-term financial planning. Read more in our articles Is equity release right for me? and Equity release – what are the risks?

If you want to see how much you might be able to release from your home and how much it could cost, this equity release calculator can give you an estimate. Fill in a few details to get an estimate.

If you’re looking for somewhere to start, you can get fee-free expert advice from a Rest Less Mortgages equity release specialist, with no broker fees on application. They are active members of the ERC and can advise on equity release mortgages from the whole of the market. They’ll listen to your needs and talk you through your options, so you can decide if equity release is the right option for you.

Have you recently released equity from your home or are you considering doing so? We’d be interested in hearing from you. You can join the money conversations on the Rest Less community or leave a comment below.

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