Scottish pensioners cash in as equity release popularity rises

Scottish pensioners are together cashing in £240,000 a day from their homes as the popularity of equity release grows, new study findings show.

Property wealth is reported to have boosted their standard of living in retirement by nearly £21.6million during the first three months of this year.

Over-55s finance specialist Key Retirement said new analysis showed retired homeowners made about £42,380 tax-free each on average by cashing in on their properties in the first quarter, with sales of equity-release plans up by 40% over the same period in 2016.

The study also analysed the reasons for releasing equity across the whole of the UK. It found the main motivation for using property wealth was to fund home and garden improvements, with 62% using some or all of the cash to revamp their property.

Nearly one-third used some or all of the money to clear debts, including credit cards and loans, and a further 22% repaid an outstanding mortgage.

Families are also big beneficiaries, with more than one in five retired homeowners using the cash to help out relatives, while 32% spent some or all of their money on holidays.

Duncan Mellis, an equity release specialist at Aberdeen-based law firm Aberdein Considine, which has a network of independent financial advisers across Scotland, said the recent rise in interest in equity release was sudden.

He added: “I have seen a sharp increase in the number of inquiries regarding equity release where homeowners simply wish to unlock value in their property for a variety of reasons.

“These have ranged from helping out family who are in financial difficulties following job losses to buying a new car, so interest seems to be rising.

“However, it is a complicated subject which has disadvantages as well as benefits. A borrower has to understand the full cost involved.

“It is not a decision to be taken lightly and independent financial advice is really needed by any borrower considering going down this route.”

Key Retirement also found the total property wealth owned by UK over65s who have paid off their mortgages is now worth £1.054trillion.

The finance firm said retired homeowners in the UK have seen growth of 35%, or £274billion, since it started analysing over-65s housing wealth in 2010.

Industry body the Equity Release Council said a total of £1.24billion in housing wealth was unlocked by over-55s in the second half of last year, 37% more than in the first half and 38% up on the second half of 2015.

This growth resulted in a record-breaking year for the equity-release sector, with activity in 2016 surpassing the £2billion mark for the first time to reach £2.15billion and more than 27,500 new plans agreed – the most since 2008. Employee benefits specialist Mattioli Woods scooped one of the major honours at a national awards ceremony in London.

The firm lifted the title of best corporate pensions advice firm in the trade publication event after judges hailed the “impressive” way it balanced technology and engagement with clients on retirement issues.

The accolade was received on Mattioli Woods’ behalf by consultant Charles Goodman.

Organisers said the awards celebrated “dynamic and fresh ways to offer retirement planning and pensions advice services” and companies “rising to the challenge of pension provision, particularly in the light of recent pension freedoms”.

Mattioli Woods, which has more than 700 employee benefit clients around the UK, highlighted innovations including the financial education workshops it introduced in 2016 to help employees effectively plan their savings and expenditure.

Alan Fergusson, the firm’s Aberdeen-based managing director of employee benefits, said: “We are delighted to have had these achievements officially recognised by our industry peers”.

“Independent financial advice is needed by any borrower”