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Over-55s withdraw housing equity to survive

Over-55s withdraw housing equity to survive

Category: Retirement

Updated: 15/09/2016
First Published: 15/09/2016

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Much is said about the difficulty first-time buyers have in gaining that all-important first step on the ladder, but it seems that older homeowners are still feeling the strain – so much so, that many are forced to withdraw equity from their home just to survive.

Spiralling cost of homeownership

Research from eMoov.co.uk shows that there's been a dramatic increase in people over the age of 55 drawing on the equity of their property to get by, with £17bn of funding having been provided to 350,000 homeowners through equity release since 1991 – a third of which has been released in the last five years alone.

The current economic climate is clearly taking its toll, with the spiralling cost of homeownership and the cost of living in general combining to make everyday life a financial struggle for many.

Growth of equity release

The report cited figures from the Equity Release Council, which showed that homeowners aged 55+ across the UK released housing wealth to the tune of £898m in the second half of last year, the highest half-yearly total ever recorded. This brought 2015's total to a record of £1.61bn, and by all accounts, this year is on track to beat it.

There's also been a notable increase in those aged 85+ taking out equity release products, accounting for 5.9% of the market, nearly double that of 2014. This could suggest that the cost of living means their private and state pensions have become inadequate, with equity release able to provide a source of income to fund this as well as home care and other costly expenses incurred during later life.

It could make a huge difference, too. Calculations show that equity release customers are able to boost their finances by between 109 and 179 week's full-time take home pay, taking an average of £49,607 in equity through a first drawdown withdrawal, or as much as an average of £81,324 in one lump sum (read our equity release guide for an idea of the options available).

"There has been a dramatic increase in the number of over 55s, particularly those 85 and above, having to draw equity from their property in order to survive due to the ever inflating cost of living in the UK," said Russell Quirk, CEO of eMoov.co.uk.

"Although record low-interest rates are good news for those struggling to get on one end of the ladder, it's not the case for those at the other end who have seen the interest accrued on their life savings dwindle. With savings rates ever lower, it's evident that income from pensioner's savings is under pressure and therefore necessitating that equity is being increasingly turned to in order to make ends meet."

What next?

If you're thinking of taking the plunge, make sure to do your research and speak to the experts first. Contact our no obligation equity release planner to get started.

Disclaimer: 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.