Big rise in people using their property wealth

Retired homeowners made about £42,380 tax-free each on average by cashing in on their homes during the first three months of this year, say leading over-55s finance specialist Key Retirement.

Equity release plans in Scotland are up by 40 per cent compared with the same period last year.

Homeowners in this age group shared about £21.6million in equity release payouts in the first quarter of 2017.

The Equity Release Market Monitor also found most Scots pensioners who release wealth from their home use it to pay for home and garden improvements, with 62 per cent using the cash to revamp their property.

Others use it to help ease the burden of debt and raise their standard of living in retirement, with 30 per cent Dean Mirfin clearing credit cards and loans and a further 22 per cent repaying an outstanding mortgage.

Families are also benefitting from the cash payouts, with one in five retired homeowners using the money to help out relatives by giving them, for example, deposits to get on to the property ladder.

A third are simply using the wealth tied up in their homes to pay for holidays.

Dean Mirfin, technical director at Key Retirement, said: “Property wealth is making a huge contribution to retirement planning, and that is demonstrated by the growth in the value of equity being released in Scotland.

“A large percentage of pensioners are also helping family members at a time when younger generations are feeling a tighter financial squeeze and the money released from properties can really be life-changing.

“However, the biggest use of property wealth is to fund home and garden improvements, underlining how property wealth can help get your home retirement ready.

“Equity release is a growing alternative for pensioners who are seeing their savings squeezed by historically low interest rates.”