Equity release as a retirement plan

Equity Release Industry Growth Offers Customers Record Interest Rate Lows

As equity release rates continue to tumble quarter by quarter, schemes are becoming more affordable for over 55s. Recent figures show the leading interest rates on some lifetime mortgages are less than average variable rates you’ll find on traditional mortgages.

Additionally, it’s been reported equity release lending growth has reached a 10 year high, with the Equity Release Council making the announcement. This means releasing equity has risen by 28% year-on-year – for customers looking to make the most of their retirement, the rates being offered are now some of the best in the industry’s history.

In fact, equity release totalled £908 million in the first half of 2016, which is a 28% rise on last year. This is in part due to the falling equity release interest rates, but also thanks to the increasing number of schemes being made available to pensioners.

63% Growth in Lifetime Mortgages

On renowned website Moneyfacts, it was stated equity release scheme holders have “never been better served.” All the statistics point at a golden era for the industry, but it’s scheme holders who will benefit the most.

However, do remember not everyone can claim equity release. You have to be between 55 and 95 years of age and your property must be worth a minimum of £60,000. If you are eligible, you can select a scheme such as a lifetime mortgage which is the most popular for releasing equity.

There are now 75 different forms of life mortgage equity release schemes available. This is a huge increase of some 63% on the total number from last year, which is in keeping with the increase in interest for equity release and its growing popularity.

Since the Bank of England also cut the base rate to 0.25%, the ongoing spate of interest from over 55s has ensured equity release providers responded with increasingly competitive and beneficial deals.

As more interest develops, interest rates become better with each passing quarter, meaning Q4 2016 is another ideal time to secure a cash lump sum from the money locked in your property.

Equity Release: Quick Facts

Before you commit to releasing equity from your home, you should consult with an IFA to ensure you make the right decision for your circumstances. Here are a few quick facts about equity release to help you make an informed decision:

  • You can spend your tax-free cash lump sum on anything you want (popular choices being holidays, home improvements, or funding university fees)
  • Some equity release schemes, such as a lifetime mortgage, are secured against your home
  • Lifetime mortgages also ensure your home remains as yours, and with Equity Release Council approved plans you will never end up owing more than the value of your home
  • Some plans allow holders to guarantee an inheritance to family members

With these facts in mind, the increasing competition in the equity release market is only good news for over 55s. Interest rates are falling and it’s now possible to obtain flexible schemes and large cash lump sums which ensure your retirement is everything you wanted it to be.

Would you like to know more? Get in touch to discover your retirement options.