There are two equity release options, home reversions and lifetime mortgages, and according to the Money Advice Service “most people who take out equity release use a lifetime mortgage.”
On lifetime mortgages, Responsible Life reported today the number of customers releasing equity through this method has lept more than 30 percent in a year as low rates have driven a “middle-class stampede” towards the sector.
The average amount released by Responsible Life customers has risen 31 percent in 12 months, jumping from £86,000 to £112,700 in April.
“While it’s true that house prices have been gaining strongly over the same period — rising 10.2 percent in the year to March — this is not enough to explain the shift.
“Even after accounting for house price inflation, the average value of the properties being mortgaged was still 8.2 percent higher.
“This confirms that lifetime mortgages are attracting wealthier customers, who are increasingly using equity release to gift money to children and loved ones, renovate their homes, pay off existing interest-only mortgages and fund their retirement.”
“Repeated lockdowns have not only spurred huge housing demand but there has also been a home improvement frenzy.
“This remains the second most popular reason to take out a lifetime mortgage.”
Equity release options may not provide the best outcome for all those who participate and as such, consumers are regularly urged to check with an advisor before taking action.
Consumers can check the FCA register and Equity Release Council member directory to make sure the advisors they’re dealing with are legitimate and qualified.
This post originally appeared on Daily Express :: Finance Feed