Could your home help pay off an in­ter­est-only mort­gage?

Rutherglen Reformer - - News -

Re­tired UK home­own­ers re­leased more than £2.1billion of eq­uity from their prop­er­ties last year as the mar­ket reached an all-time high.

Fig­ures from over-55s fi­nance spe­cial­ists Key Re­tire­ment re­vealed the av­er­age cus­tomer ac­cessed nearly £78,000 from their home to boost their stan­dard of liv­ing.

The to­tal value of prop­erty wealth re­leased in 2016 was up by 26 per cent on the pre­vi­ous year at £2.154 bil­lion.

In Scot­land, home­own­ers ac­cessed more than £86mil­lion in eq­uity, with re­search find­ing two-thirds of cus­tomers used the cash to make home and gar­den im­prove­ments.

Around a third (31 per cent) are spend­ing some of their prop­erty wealth on clear­ing loans or credit card debts, nar­rowly ahead of the 29 per cent who use the money to fund hol­i­days, with 24 per cent us­ing it to help out fam­ily.

Mort­gage re­pay­ment, which is ex­pected to be­come a big is­sue in 2017 and beyond due to the pres­sures on older home­own­ers of in­ter­est-only mort­gage terms com­ing to an end, ac­counted for 22 per cent of use for funds re­leased.

Eq­uity re­lease is avail­able to those aged be­tween 55 and 95, who own a prop­erty worth at least £60,000.

The amount of tax-free money re­leased varies, de­pend­ing on fac­tors such as age and the value of the prop­erty.

Dean Mirfin, tech­ni­cal di­rec­tor at Key Re­tire­ment, says last year’s record fig­ures point to the con­tin­ued in­creas­ing use of eq­uity re­lease as a means of sup­ple­ment­ing re­tire­ment in­comes and help­ing to im­prove qual­ity of life for the over 55s. He added: “The eq­uity re­lease mar­ket has broken through the £2bil­lion bar­rier for the first time and has more than dou­bled in value in just five years, high­light­ing how prop­erty wealth is mak­ing a huge con­tri­bu­tion to re­tire­ment planning.

“The av­er­age amount be­ing re­leased by re­tired home­own­ers at nearly £78,000 un­der­lines that prop­erty wealth can help with a num­ber of is­sues for cus­tomers, rang­ing from im­prov­ing their homes and go­ing on hol­i­day to help­ing fam­ily and clear­ing debt.

“With more than one in five re­leas­ing eq­uity from their homes to re­pay mort­gages, and with 2017 be­ing the start of the first ma­jor wave of in­ter­est-only mort­gage ma­tu­ri­ties, we ex­pect de­mand from those with a short­fall to re­pay the cap­i­tal – or no means at all – to turn to eq­uity re­lease as a so­lu­tion, which will fur­ther drive de­mand.

“Rate cuts across the mar­ket and the launch of new so­lu­tions demon­strates that the mar­ket is re­spond­ing to the grow­ing need for al­ter­na­tives to tra­di­tional re­tire­ment in­come so­lu­tions, which are be­ing squeezed by the his­tor­i­cally low in­ter­est rates.”

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