Equity release is known as being a great way for retirees to free up some of the cash from their home, but did you know that it can help first-time buyers, too? Well, according to a new report from Retirement Advantage, equity release has helped 13 people a week onto the housing ladder so far in 2017, as generous parents and grandparents pass on their wealth to the younger generation.
The figures show that, in the first half of 2017, 2% of customers said they purchased an equity release plan so that they could help a first-time buyer, while at the same time, additional figures from the Equity Release Council recorded 16,805 new equity release customers over the six-month period.
This equates to an estimated 13 people each week being helped on to the first rung of the property ladder as a direct result of equity release, "highlight[ing] the scale of support first-time buyers receive from relatives, who are tapping into their property wealth alongside other savings to help loved ones purchase their first property," the report stated.
"Much has been made of the financial support first-time buyers get from relatives," said Alice Watson, head of Marketing at Retirement Advantage Equity Release, "[and] what we are seeing is that existing property wealth is a significant source of finance for that support. For the majority of over-55s, property is their single biggest source of wealth.
"People want to use the value stored away in their properties to treat themselves in retirement, in the shape of home improvements or holidays, but they want to help loved ones too. As the equity release market continues to boom and products grow in popularity, helping first-time buyers comes up consistently as a common reason for choosing to release equity – it is likely we'll see many more people become property owners thanks to equity release over the coming months and years."
Many people approach the Bank of Mum & Dad for help when buying their first home, and it seems that the Bank of Gran & Grandad is being increasingly turned to as well.
This kind of support could go a long way to securing that all-important first-time buyer mortgage, with it often being difficult to save up the necessary funds alone. After all, even though it's possible to secure a mortgage with a deposit of just 5%, that 5% can still be a hefty sum, and even with the best savings account, it isn't always that easy – particularly given the state of house prices at present.
In even better news, high-LTV mortgage rates have been falling recently, so those who are planning on supporting their loved ones are picking a great time to do so. Contact our no obligation equity release service to find out more, and for those in receipt of this kind of financial help, start comparing the best first-time buyer mortgages.
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.