Well-to-do, el­derly – and ea­ger to bor­row more

The Daily Telegraph - Your Money - - FRONT PAGE -

Changes to pen­sion rules and a rise in death du­ties prompt the wealthy el­derly to take on mort­gages, says Sam Brodbeck

Once seen as a last re­sort, the use of spe­cial­ist, later-life mort­gages is in­creas­ingly com­mon among well-off home­own­ers keen to fund “liv­ing in­her­i­tances” and avoid death du­ties. The pro­por­tion of £500,000-plus prop­er­ties be­ing used for “eq­uity re­lease” – as this bor­row­ing is gen­er­ally termed – has risen at some spe­cial­ist firms by as much as three times since 2012.

In part this surge has been driven by the boom­ing hous­ing mar­ket, par­tic­u­larly in Lon­don and south-east Eng­land.

How­ever, the growth in the value of the av­er­age prop­erty used to with­draw cash us­ing eq­uity re­lease or “life­time mort­gages” has far out­stripped na­tional house price rises – sug­gest­ing that eq­uity re­lease is go­ing “up­mar­ket” as wealth­ier peo­ple em­brace it as a broader fi­nan­cial plan­ning tool.

House prices across the coun­try rose by an av­er­age of 12.6pc be­tween 2014 and 2017, ac­cord­ing to fig­ures from Na­tion­wide Build­ing So­ci­ety, com­pared with a 26pc rise in the value of the av­er­age house used for eq­uity re­lease (see graph on Page 4).

“The in­crease in the num­bers of wealth­ier, older home­own­ers ex­tract­ing cash from their homes through eq­uity re­lease is tes­ta­ment to the fact that those with con­sid­er­able prop­erty wealth are look­ing to utilise it,” said Dean Mirfin of Key Re­tire­ment So­lu­tions, a spe­cial­ist ad­viser.

The pen­sion free­doms, a se­ries of

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