Equity release helps retired home owners to cash in
Figures from leading over-55s financial specialists Key Retirement show that the total property wealth owned by over-65s who have paid off their mortgages grew to a record £1.101trillion in August.
That means more than £47.2billion has been added to the property wealth of the UK’s retired homeowners over the three months leading up to August as the property market recovers.
Since 2010, retired homeowners have seen growth of 41 per cent or £321billion, which is worth around £68,500 on average for every over-65 homeowner. Owning a home has been worth around £9,800 a year for over-65s.
It’s no wonder that more and more Scots pensioners are releasing equity on their homes to fund their retirement dreams.
Key’s Pensioner Property Equity index shows that over-65s in Scotland made an extra £12,000 each from their properties between May and August 2017.
The strength of the housing market means property wealth is making a major contribution to retirement standards of living as the equity release market expands.
Average equity release customers are cashing in £70,625 of property wealth.
Equity release, known as a lifetime mortgage, is only repaid either when you die or move into long-term care. Reasons people release property wealth include home improvements (64 per cent), clearing debts, with three in 10 pensioners using the cash boost this way, a third using it to fund holidays, and a further 23 per cent using it to pay off their mortgage. More than a fifth use it to help relatives.
Dean Mirfin, chief product officer at Key Retirement said: “The strength of the housing market over the three months has significantly boosted property wealth for pensioners making as much as £3,500 a month.
“Prices may not continue to grow as fast but pensioners who have paid off mortgages can still rely on tax-free returns no matter what happens in the short and medium term.
“The average homeowner is releasing through equity release the equivalent of the gains made since 2010 and property wealth is having a dramatic effect on the standards of retirement living for many thousands across the UK.”