Equity Release schemes on the rise
30 October 2007 The amount of equity in peoples’ homes has risen dramatically, and the biggest winners from the UK’s housing boom are the over 55s who are sitting on an average of £265,000 worth of equity, according to equity release provider Home & Capital. “For the over 55s, equity release is a legitimate tool in their financial armoury," said sales director Nigel Hare-Scott. "The average retired person could raise a six figure sum based on the equity in their property."
Halifax Financial Services found that the amount of equity held by British homeowners increased by 244% in the last decade, reaching £2.7trillion at the end of 2006. Housing equity now forms 43% of a household’s total wealth compared to 28% in 1996.
A recent study by Datamonitor found that 12.9million UK homeowners plan to release equity from their homes at some time in the future to supplement their retirement lifestyle. The latest report from Equity release specialist Key Retirement Solutions' confirms this and found that take up rates of equity release plans continues to show strong growth, with lending up in every UK region. The biggest players were homeowners in London releasing an average of £85,000, while Northern Irish homeowners' equity release increased by over 300%. The firm attributes this to the increased availability of equity release products and rising house prices.
Equity release products are designed to help people pay for expensive medical care, offer financial help to children, or enjoy a better quality of life; but a considerable portion of this money is used to purchase property overseas? This is supported by a recent study by the British Department for Communities and Local Government which found that, in addition to the UK’s 278,000 second home owners, a further 211,000 households own a property outside the UK. “Interestingly, only 38% of people over 55 own a property in England, consistent with the fact that 54% of second home owners say their main motivation for buying was to own a holiday or retirement home,” said a spokesperson for the report.
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