A new equity release product has been launched every 28 hours since January 2020, according to the latest analysis from Key Partnerships.
There are now more than 525 options on the market available for people wanting to release equity on their home: more than five times what was available just two years ago.
Since the end of 2019, the market has grown by 67%, meaning that 210 new equity release plans were launched in just 244 days.
With more funders than ever active in the market, there is more choice and more competitive interest rates than ever, which is great news for customers. That said, it is important to ensure that when customers do look for support around how to access their housing equity, they consider all their options and pick the right product for them.Said, Jason Ruse, Business Development Director at Key Group
Equity release, sometimes known as a 'lifetime mortgage', allows homeowners over the age of 55 to borrow a tax-free sum against the value of their home.
People may withdraw the money in a single lump sum, or as a steady stream of smaller 'drawdown' payments.
Customers don't make any repayments as long as they are alive or living independently; instead, the loan is repaid, with interest, from the sale of their home when they die or move into long-term care.
The scheme, once associated with financial hardship, has undergone something of a renaissance in recent years.
Since 2010, the number of retired people looking to equity release has increased fourfold, with more customers looking to fund better lifestyles in retirement, or help children onto the property ladder.
According to research carried out by Key, around 30% of customers in 2019 used part of their cash to pay off loans, while 20% paid off part of an existing mortgage. A much larger group (64%) used some of the money for home improvements, while holidays (32%) and helping out family (28%) were both popular ways to spend the money.
Property assets have long been one of the nation's main sources of wealth and are likely to play an increasingly important role to support people when addressing the challenges facing many in later life, including bridging the savings gap for older homeowners who are asset rich but cash poor.said Chairman of the Equity Release Council David Burrowes.
Historically low-interest rates are likely to have played a part in the continuing market uplift, according to Key.
Lower interest rates make the most painful element of equity release plans- the rolling interest- appear more palatable to many.
Because no payments are made on the debt while homeowners are alive, the interest on equity release plans can mount up quickly.
However, Claire Singleton, CEO of Legal & General Home Finance, warned that customers should not rush into a decision, regardless of the economic conditions.
It must be made clear that equity release is not an 'immediate needs' product and therefore requires careful consideration. Much has changed since the start of the year, making it even more important to pause, take advice and avoid reacting hastily to financial concerns."Claire said.
Here at Money Savings Advice, we have partnered with some of the UK’s leading Equity Release brokers. They have already helped thousands of people get the best Equity Release deal and they can do the same for you.
Choosing an independent adviser means they won’t recommend a scheme unless they are sure it is in your best interests. Their advice is also regulated by the FCA, which gives you an additional layer of protection.
If you would like to speak to one of these brokers who can provide you with a ‘whole market quote’ then click on the below and answer the very simple questions.
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