Retired homeowners are using property wealth

Equity Release May 9, 2018

By Rosie Murray-West

Retired homeowners are increasingly using their property wealth to get family members onto the property ladder, or to pay for university, a new study has shown.

Figures from Key Retirement showed one in four pensioners were using their homes to help their family, with money going to house deposits, university fees, debt repayments and business start ups.

The percentage using property wealth for gifting increased to 26 per cent from 22 per cent in the first quarter of 2017.

“Gifting is a major motivation for equity release and our data shows it is more a case of parents and grandparents wanting to gift rather than children asking for help,” said Dean Mirfin, chief product officer at Key Retirement.

“They’re motivated by the desire to help when the money is really needed and being around to see the difference that it makes. In addition, equity release enables them to have some control over how the money is ultimately used.”

The figures showed that while many are giving away money from equity release, pensioner debt is also a factor. More than a fifth (21 per cent) of people used proceeds of equity release to pay down mortgages, while 30 per cent using it to clear credit cards and loans.

The average retired homeowner took £74,000 from their home, and the total amount released in the first quarter of the year was £777m. The south east of England accounted for more than a quarter of all equity release sales and nearly 30 per cent of total lending.

The most popular use of the cash was to fund home and garden improvements with 63 per cent of retired homeowners spending money on their houses. But the size of the average amounts being released means 31 per cent were also able to pay for holidays.

The figures showed many more people were taking advantage of more flexible equity release mortgages. Around 68 per cent of all sales were drawdown plans, including 16 per cent in enhanced drawdown which offers enhanced terms to people with health or lifestyle conditions.

Single advance lifetime mortgages accounted for 32 per cent of sales, of which 17 per cent were enhanced products.

Pensioners (retirees) on this side of the pond can learn about the Home Equity Release program by searching on the home page for the “information tab”. The publisher of this webpage is also a veteran mortgage loan officer in Arizona and can give you details to get started including a free analysis to discuss with you the qualifications needed.