Equity release is continuing to enjoy a spell in the sun, latest figures1 show, as an increasing number of older homeowners choose to borrow against the value of their home.
Up and up
Equity release allows over-55s to access some of the value of their home as tax-free cash. In total, homeowners used equity release to borrow £6.2bn in 2022, a 29% yearly rise. Since 2017, the market has more than doubled.
It’s not just the amount being borrowed that’s increasing, there are also more individual equity release plans being taken out. Last year, 93,421 people chose to release wealth from their property, which is up 23% from the previous year. The number of new equity release plans taken out also increased by a fifth.
The main reason for releasing equity is still to meet everyday spending needs. With household budgets stretched, equity release is a convenient choice for many older homeowners trying to keep up with rising bills.
Last year, more than half of new customers opted for lump sum plans, up from 43% in 2021. The average lump sum received was £128,382 in the final quarter.
The popularity of equity release also reflects recent improvements for consumers. For example, in March 2022, new regulation was introduced to guarantee that all new plans with Equity Release Council (ERC) approval give customers the right to make voluntary, penalty-free partial repayments to reduce interest costs. In addition, products meeting the ERCs standards are required to feature a ‘no negative equity guarantee’, meaning your estate will never owe more than the property is worth when it is sold.
Equity release might not be the best choice for everyone. When considering releasing equity, it is important to weigh up your options and make sure it is suitable for your unique needs. Last year, more than half of new customers opted for lump sum plans, up from 43% in 2021. Get in touch today to see how we can help!
1 Equity Release Council, 2023
🚨 Data accurate as of the date of publication – 16.07.2023
🚨Think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
🚨 The above material is for informational purposes only and does not constitute a sales offer or financial advice. Before taking out any insurance, credit agreement or other financial product, you should obtain individual advice on your requirements and the general terms of the contract.
Source: Quilter Financial Planning – Essentially Mortgages Q2 2023