It’s no secret that equity release is becoming more and more popular, with 2018 representing a seventh consecutive year of growth.
The UK’s over-55 homeowners unlocked nearly £4bn tax-free from their homes to help boost their finances and meet any later-life challenges¹.
One reason behind this record-breaking growth is the rise of specialist mortgages, known as Lifetime Mortgages. They have quickly become the most popular type of equity release product for several reasons. Firstly, you remain the sole owner of your home for life; you’ve just borrowed against its value. Secondly, there are no required monthly payments, so they don’t restrict your budget. On top of this, the funds you unlock are tax-free and are yours to spend any way you wish.
Here are three of the most common reasons that Responsible Equity Release customers accessed their property wealth in 2018.
Mind the gap!
Older homeowners unlocked a record £136 of property wealth every second in Q4 2018, with many using their newly-released capital to pay off interest-only mortgages. The Financial Conduct Authority estimates that over 40,000 interest-only mortgages are due to mature every year between 2017 and 2032². Unfortunately, thousands of borrowers who took out these mortgages before the credit crisis do not have an adequate repayment strategy in place to repay the capital they borrowed.
Last year, 30% of Responsible Equity Release customers used their property wealth to repay their existing mortgage. By repaying their previous mortgage in this way, they freed themselves of required monthly payments and had anything left over to spend as they wished. It also had the added benefit of leaving their current savings and pensions intact.
Out with the old, in with the new
We all have changes we would love to make to our homes, potentially transforming your home into your ideal living space. Adding extra square footage or renovating the interior can completely change how you use your home and maximise your enjoyment and comfort.
However, making sweeping changes to your home could run into the thousands and put the brakes on your design ambitions. If it’s money that is holding you back, then unlocking a portion of your home’s value could be the opportunity you’ve been looking for. It was the second most common reason to release equity, according to customer data. It can also be a great way of adding value back into your home, meaning the work may effectively pay for itself.
Making life more comfortable
Equity release is often used to take the pressure off and allow homeowners to live the lifestyle they desire. Repurposing property wealth in this way can be the most suitable way to boost budgets over the long-term – there are even plans available which allow you to release your equity like a salary. A popular option for those who prefer the discipline of a monthly income and want to keep the costs to a minimum.
By using your equity to cover overheads, you can use your savings and pensions for the things that matter in life. Allowing you to make the most of your time, getting out and about more, socialising, and spending more quality time with family – without the background worry of the purse strings.
Responsible Equity Release
If you are looking to explore your later-life funding options, then it has never been easier to get qualified advice on your terms. Responsible Equity Release offer a free, no obligation, consultation at a time and place of your choosing. Their nationwide team of advisers are available to discuss all your options and talk you through how releasing equity may reduce the value of your estate in time and could affect your entitlement to means-tested state benefits.
To start your equity release journey, why not have an informal discussion with a member of our friendly Information Team today on 0800 756 3958. Better yet, you can work out how much equity you could release right now by using our online calculator.
☎ 0800 756 3958
Responsible Equity Release is a trading style of Responsible Life Limited. Responsible Life Limited is Authorised and Regulated by the Financial Conduct Authority and is entered on the Financial Services Register (http://www.fsa.gov.uk/register/home.do) under reference 610205. Only if your case completes will Responsible Life Limited charge an advice fee, currently not exceeding £1,490.
¹ Source: Equity Release Council Q4 Lending Figures 2018 24.01.19
² Source: https://www.ageuk.org.uk/latest-news/archive/fca-issues-warning-on-interest-only-mortgages/
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