Homeowners using equity release to get the best use out of their property equity
The equity release market is at a three-year high, suggesting homeowners are increasingly turning to their property in these financially tough times.
Last year saw a 10 per cent increase in the number of equity release plans taken out and a 17 per cent increase in the collective value of these plans. In total homeowners released equity in the amount of £925.7m throughout 2012 compared to £788.6m the year before.
On average a homeowner released £52,191 – a figure which is higher than in any year since 1998. It is believed this increase is in large part down to older homeowners reaching retirement with outstanding mortgages and credit card debt.
The most common type of equity release plan remains the drawdown mortgage, growing by 13 per cent. A drawdown mortgage allows the homeowner to gradually release smaller sums of equity as and when they require.
However, as an increased number of people are using equity release to clear debts or help loved ones get on or move up the property ladder, lump sum mortgages continue to grow in popularity and now account for a third of the market.
Andrea Rozario is the Director General of the Equity Release Council (ERC):
“The ongoing debate over issues like later life finances and the cost of elderly care has already grabbed the attention in 2013. But the growth of the equity release market over the last twelve months is a really positive sign that people are making proactive moves to get the best use out of their housing equity.”
Content correct at time of publication