The number of equity release deals on the market has more than doubled in just two years as lenders offer more choice and flexibility to borrowers.
Research carried out by Moneyfacts.co.uk has found that this month there are 698 equity release deals on the market, this compares to 480 deals available in August 2020 and 383 deals available in August 2019. Along with the growth in deals, lenders have also increased the maximum loan-to-value (LTV) for equity releases deals, on average from 49% to 50%.
The increase in the number of equity release deals has also resulted in more flexibility available on plans. For example, it is now common for equity release plans offering competitive rates to allow borrowers to take drawdown and many will also allow partial repayments or interest repayments to be made. This can help reduce the cost of borrowing via an equity release.
“The equity release market has remained resilient during 2021 and, in fact, business is booming and is expected to grow in the years to come, explained Rachel Springall, finance expert at Moneyfacts.co.uk. “Advisers remain optimistic in the sector and lenders have made it clear that they are prepared to compete and tailor their ranges to suit borrower demand. In the next decade, the amount of equity released per year is predicted to grow from £3.7bn in 2021 to £6.4bn according to More2Life.”
She added: “A recent study by More2Life revealed that 94% of advisers are confident in the equity release market over the next 12 months and 54% named product innovation as an important factor. The boom in product choice can provide a deal more tailored to someone’s circumstances, and lenders have shown their commitment to adapt their ranges. At present, Just currently has the largest range with over 300 deals, which rose due to its introduction of a fixed early repayment option, which doubled its range. More2Life, Legal & General Home Finance and Pure Retirement are the next brands to offer the largest volumes of options to navigate.
“The busiest month for lifetime mortgage business during April to June 2021, according to the Equity Release Council (ERC), was June, which could be attributed to the rush to make the stamp duty holiday for those borrowers hoping to pass some wealth as an early inheritance onto their children to help them get a step onto the property ladder. Borrowers may also be using property wealth to make home improvements, either by using a drawdown facility as and when they need it, which remains popular with new customers, versus as a lump sum lifetime mortgage. Whilst ERC research suggests drawdown was subdued during the pandemic, returning drawdown activity from April to June 2021 was the strongest recovery segment versus April to June 2020 with customer numbers up by 67%.
“Borrowers looking to take advantage of equity release need to seek unbiased independent advice to ensure it is the right option for them. Regardless of whether they are adamant they want to release equity out of their home, it is always a good idea to get a second opinion as there may be other alternatives. Starting a conversation with any family members is also constructive to avoid any awkwardness about inheritance.”
The Equity Release Service is provided by HUB Financial Solutions Limited. HUB Financial Solutions Limited. Registered office: Enterprise House, Bancroft Road, Reigate, Surrey RH2 7RP. Registered in England and Wales no. 05125701. HUB Financial Solutions Limited is authorised and regulated by the Financial Conduct Authority. Part of Just Group plc. Moneyfacts.co.uk itself is not authorised by the Financial Conduct Authority for equity release business, so we refer our customers to HUB Financial Solutions’ regulated service.
Any legal or contractual relationship will be with HUB Financial Solutions. There may be a fee for mortgage advice. Your adviser consultation appointment is FREE and carries no obligation. If you choose to proceed with a recommended product, an advice fee of £1,100 would be payable upon completion. Moneyfacts.co.uk will receive a commission from the lender. HUB Financial Solutions does not offer advice on investments.
Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. Moneyfacts.co.uk will receive a small payment either if you click the links or if you use their services after you click through to their site. All information is subject is subject to change without notice. Please check all terms before making any decisions.Disclaimer
All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfacts.co.uk will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts.co.uk recommends you obtain independent financial advice.
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. Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. Moneyfacts.co.uk will receive a small payment if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.