The equity release market went from strength to strength last year, and now, new figures have confirmed what was already predicted – lending has surged to an all-time high, with retired homeowners withdrawing a record £2.15 billion from their homes!
That's according to analysis from Key Retirement, with the annual total marking an increase of 26%, as well as the fifth consecutive year of growth. The number of homeowners releasing property wealth also rose, this time by 17% to around 27,666, up from 23,747 in 2015. This means that the average retired homeowner accessed £77,877 through equity release – a huge sum by anyone's standards! But just what are people doing with all that cash?
Well, around two-thirds (63%) of customers spend some or all of the funds released for home and garden improvements, while 31% use it to clear loans or credit card debts. A further 29% use some of the money to fund holidays, while 24% choose to help out family. Just 22% of customers used their property wealth for mortgage repayment, yet with the rising pressure of interest-only mortgages, this looks set to increase.
Whatever you'd spend the money on, it can't be denied that equity release could well be worth considering. There are a couple of key options you could choose from, too: drawdown plans, which accounted for 62% of all sales last year, allow you to release smaller sums of money when you need, while lump sum single advance lifetime mortgages (which accounted for 38% of 2016 sales) give you the full amount in one go.
Which option you go for will depend on your personal needs and circumstances, and your decision should always be made with the help of an independent adviser. Start the process by contacting our no obligation equity release advice service, and make sure to read our guide to equity release to get a better idea of the options available to you.
Whether you choose to go ahead or not, it can't be denied that the industry is enjoying a surge of popularity, and this is only set to continue in the year ahead. Dean Mirfin, technical director at Key Retirement, commented on the findings: "The equity release market has broken through the £2bn barrier for the first time and has more than doubled in value in just five years, highlighting how property wealth is making a huge contribution to retirement planning.
"The average amount being released by retired homeowners at nearly £78,000 underlines that property wealth can help with a number of issues for customers, ranging from improving their homes and going on holiday to helping family and clearing debt. Rate cuts across the market and the launch of new solutions demonstrates that the market is responding to the growing need for alternatives to traditional retirement income solutions."
Find out more about equity release to see if it could be for you
Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.