Freeing up funds or releasing money tied up in your home
For some people in the future using their home to fund their retirement is likely to become more commonplace, whether that’s by downsizing to free up funds or releasing money tied up in their home through products like lifetime mortgages.
Homeowners could release some of the equity from their property to top up their retirement savings, through a process known as equity release. Using equity release for retirement income isn’t an equal replacement for pension savings, but if you’ve got a shortfall, then releasing money from your home may help you reach your retirement goals.
Home value
Analysis has highlighted homeowners in 53% of areas in England & Wales could access more from the value of their home than is saved in the average pension pot (£61,930)[1] by using equity release, according to analysis and based on median local house price data from the Office for National Statistics (ONS)[2].
Homeowners in England and Wales could release on average £72,988 worth of equity from their homes, an average increase of £14,000 in just five years due to a 24% increase in median house price values since 2016.
Price growth
Ongoing house price growth has led many homeowners to consider the role their property might play in their long-term financial planning. One in seven pre-retired over 50s (16%) plan to use their property wealth to boost their finances via products like lifetime mortgages, a type of equity release, or via downsizing. However, an additional 13% said a significant increase in the value of their property could also persuade them to do so.
In recent years, we have seen house prices increase to the extent that they will have become the most significant asset available to many UK homeowners. The average UK property price has hit a new record high of £272,992, with growth now at 15-year high[3].
Source data:
[1] Refers to average an pension pot of a pre-retired person over 50. Opinium survey of 2160 UK Over 50s in the UK who have not retired between the 9th and 13th August 2021
[2] Office for National Statistics, House price statistics for small areas in England and Wales: year ending March 2021, Nov 2021
[3] The Halifax House Price Index (IHS Markit) November 2021
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR MORTGAGE IS SECURED ON YOUR HOME, WHICH YOU COULD LOSE IF YOU DO NOT KEEP UP YOUR MORTGAGE PAYMENTS.
EQUITY RELEASE MAY INVOLVE A HOME REVERSION PLAN OR LIFETIME MORTGAGE WHICH IS SECURED AGAINST YOUR PROPERTY. TO UNDERSTAND THE FEATURES AND RISKS, ASK FOR A PERSONALISED ILLUSTRATION.
EQUITY RELEASE REQUIRES PAYING OFF ANY OUTSTANDING MORTGAGE. EQUITY RELEASED, PLUS ACCRUED INTEREST, TO BE REPAID UPON DEATH OR MOVING INTO LONG-TERM CARE. EQUITY RELEASE WILL AFFECT THE AMOUNT OF INHERITANCE YOU CAN LEAVE AND MAY AFFECT YOUR ENTITLEMENT TO MEANS-TESTED BENEFITS NOW OR IN THE FUTURE.
CHECK THAT THIS MORTGAGE WILL MEET YOUR NEEDS IF YOU WANT TO MOVE OR SELL YOUR HOME OR YOU WANT YOUR FAMILY TO INHERIT IT.
IF YOU ARE IN ANY DOUBT, SEEK PROFESSIONAL FINANCIAL ADVICE.
Footnote: Our belief is that all finacial advice should be tailored to your particular needs and situation. The content of the articles featured in here are for your general information and use only; they are not intended to address your particular requirements or constitute a full and authoritative statement of the law. They should not be relied upon in their entirety and shall not be deemed to be, or constitute advice. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. Please get in touch to meet with us for a full consultation.
