Mortgage News



Homeowners take over £1bn from equity release during the first quarter of 2021

June 22, 2021
Information published was correct at the time of writing

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As you pay off your mortgage, the amount you own outright – the ‘equity’ – increases. Some people choose to release this equity to help fund anything from a home extension to their retirement. In the first quarter of 2021, UK homeowners released £1.14bn in equity *, spurred on by the rise in house prices and low interest rates.,.

Over the last 12 months, the average amount released has also risen by 20 percent to £123,028. In the same period, the average UK house price rose by 10.2 percent to £256,405 in the year to March 2021 (Source: ONS).

All these factors have made equity release more attractive for homeowners over the age of 55, who are using the wealth their property has generated to pay off existing mortgages and unsecured loans, fund building works or help children buy a property of their own.

According to the Financial Times, homeowners are benefiting from the boom in property prices unprecedented in history. It says:

“If house prices had risen in line with inflation during the past 50 years, the cost of the average home would have gone from just over £4,000 to £72,500. In fact, it is more than £256,000. House price inflation has taken numbers in some parts of the country to extraordinary levels. Savills, the estate agent, estimates more than half a million homes are now worth at least £1m.”

The most popular type of equity release is the ‘lifetime mortgage’. (for more details on this read our article: https://ccameron.co.uk/hub-post/how-to-make-your-property-pay-for-your-retirement/), Lifetime Mortgages give homeowners a tax-free lump sum while maintaining full ownership of their home. The loan amount and the accrued interest is repaid to the lender by their estate when they die or move into long-term care.

The interest rate is typically fixed at the beginning of the term making it especially attractive to the over 70s.

While these developments bode well for homeowners in search of extra cash, the process is not without its risks. However, other mainstream mortgage products could be a good option too – such as RIOs (retirement interest only mortgages) and so by talking to us we can explore all options and recommend the most suitable type of financing before you decide on equity release.

Our years of experience and contacts within the mortgage industry will ensure you get a deal that works for you and the people you care about.

* SOURCE: Key Equity Release’s Market Monitor

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