Rising numbers of over-55s are using equity release to unlock wealth trapped in their property to share with loved ones

The current economic uncertainty has seen an increase in the volume of homeowners looking to access tax-free cash from their homes through equity release.

These homeowners are tapping into cash that’s tied up in their property to provide a financial boost to their loved ones, give themselves some peace of mind and financial control during uncertain times.

In many cases, the funds they release from their home are being used to repay an existing mortgage, which in turn frees up more disposable income that would have otherwise gone on making monthly repayments. Lots of people are still looking to the future and helping to fund university costs and even cover wedding day bills for their loved ones, as well as providing a degree of security.

According to leading broker Age Partnership, the number of over-55s opting to release thousands of pounds worth of equity from their property to help loved ones has rocketed over the past five years.

Its statistics show those planning to give children or grandchildren a share of their property’s wealth has jumped from 5.7% in 2014, to 12.5% last year.

It suggests that homeowners are becoming increasingly aware of how their home’s hidden value can be put to good use now, rather than simply lying idle.

Just over a quarter (25.8%) of people opting to release funds last year wanted to use the cash to repay their standard mortgage.

While a similar number (25.1%) were looking to plough wealth tied in their property back into their home, by spending on house improvements and upgrades.

Andrew Morris, Equity Release Advisor at Age Partnership said: “Many people have ploughed money into their home all their working lives and now see the benefits of releasing some of that back to support those closest to them.

“Unlocking some of the wealth that’s trapped in their home can make a world of difference to their children or grandchildren’s start in adult life, and give them funds to spend on what they want.”

Equity release is available to homeowners who are over-55. It enables them to access thousands of pounds lying dormant in their property without the disruption of moving to a smaller, lower value home. A major ‘plus’ for many is that they continue to own all of their home, and don’t have to worry about making repayments unless they want to. While they do have to ensure any outstanding mortgage is repaid, often there are still thousands of pounds available to spend as they choose.

Most people choose to take out a loan secured against their property, known as a ‘lifetime mortgage’.

That way the funds they want are released either as a lump sum or in regular payments, but the loan and accrued interest aren’t paid back until the property is sold when they die or they move into long term care.

If someone chooses to move house before then, they can usually take the lifetime mortgage with them or they could settle up with their lender. This will be dependent on the lenders T&Cs and any early repayment charges.

Recent figures from the Equity Release Council revealed £3.92billion was withdrawn by more than 85,000 homeowners last year, confirming the option remains popular with people looking to make the most of what they have paid into their home, while they can.

The equity release market has grown almost fourfold in the past decade. New products and greater flexibility – such as the option to make voluntary or partial repayments without early release charges – is said to be helping to encourage more people to embrace the idea.

Age Partnership offers a range of financial services and works hand in hand with a range of leading lenders including Aviva, Legal & General and LV=.

While it’s always best to check your options with an independent financial advisor, Age Partnership’s online equity release calculator can provide an outline of what value may be locked in your property, while its experts can provide a ‘no obligation’ equity release quotation tailored to your property.

Want to explore how equity release could benefit you and your family? Call Freephone 0808 500 1523 to request your free guide to equity release.