Equity release enquiries double year-on-year
The dynamic of the equity release industry has changed in recent years as homeowners struggle to make ends meet.
Previously, equity release was typically used to improve the quality of retirement. However with high debts, high inflation and high unemployment stretching many people’s income to near breaking point, equity release is now being used to simply cover the general cost of living.
According to recent figures from national equity release broker, Responsible Equity Release, three quarters of their customers used the equity in their home to help either themselves or their families cope in the current financial climate.
36 per cent of customers who took out an equity release plan in 2011 used it to cover mortgage repayments, a staggering annual increase of 31 per cent.
23 per cent, up 22 per cent year-on-year, used their equity to help family members to pay debts, through unemployment or raise a deposit to buy a property.
Meanwhile, 16 per cent used their equity as a means of income to pay increasing household bills.
Richard Espley, Head of Equity Release at Goldsmith Williams, is not surprised by these figures:
“We may have avoided a double-dip recession thus far but there is no denying the dire straits our personal finances are in.
“With unemployment rising, pension provisions poor and debts eating away at any savings we may have stowed away, it makes sense that homeowners are turning to the equity in their property to help make life that little bit easier.
“This difficult financial period has played a major part in changing people’s perception of equity release. It would appear it is no longer seen as the niche product it once was but is now being viewed as a viable financial solution.
“This alternated perception, however, accentuates the need for brokers and solicitors to step up and ensure clients fully understand the financial and legal implications of such a product. Equity release may be becoming a more commonplace option for homeowners but it remains a complex product, one than needs both financial and legal advice from qualified professionals.”
Content correct at time of publication