The Equity Release Council recently announced that homeowners had released a record amount of equity from their properties during 2017. Their figures showed that for the first time in a single year more than £3 billion was borrowed using equity release plans – an increase of 42% against 2016.
The Council said that just under 67,000 customers had used this form of borrowing to unlock part of their housing wealth to help manage their finances in later life. So, why is equity release growing so quickly in popularity?
For many older people, their home is their biggest asset. Equity release is a way of releasing the wealth tied up in your property without having to sell it and move to another home. And the cash that it releases can be used to fund home improvements, take holidays, fund care costs or simply to supplement your income
You can either borrow against the value of your home or sell all or part of it in exchange for a lump sum or a regular monthly income. Some plans give you the option to “draw down” further equity (cash) at a later date, based on your requirements.
There are two main types of equity release - Lifetime Mortgages and Home Reversion plans. Both types of plan are regulated by the Financial Conduct Authority (FCA). Drawdown lifetime mortgages are the most popular – with more than 70% of new equity release customers in 2017 opting for that type of plan.
Equity release customers must be at least 55 years old. You will have to live with any decisions you make to free up the cash locked in your property for the rest of your life, so it is essential to understand exactly what you are committing to.
This is where it pays to get independent and expert advice. To speak to one of Chadney Bulgin’s specialist advisers and get all the facts you need to make a proper considered decision, call us on 01243 532161 or email email@example.com.
This is a lifetime mortgage/home reversion scheme. To understand the features and risks, ask for a personalised illustration.