Homeowners use equity release to access almost £4 billion of wealth from their homes up for the seventh consecutive year.
The latest report from the Equity Release Council reveals 82,791 equity release buyers accessed £3.94 billion using equity release during 2018.
During the year there were 46,397 new homeowner plans more than double the 22,749 three years ago in 2015 and four times higher than the average during the 1990s.
Lending has increased for seven consecutive years and 2018 is 29% higher year-on-year with £1.08 billion of housing wealth unlocked in the fourth quarter.
Growing demand to release cash
Customers are attracted by flexible product features of lifetime mortgages such as paying interest each month or making one-off payments penalty free, future downsizing or adding a minimum inheritance guarantee.
The availability of products has increased significantly from 24 in 2007, more than doubling to 58 by 2016 and doubling again to 139 by August 2018.
Demand from equity release mortgage buyers in 2018 has been a combination of new and returning customers increasing 24% from 66,698 last year to 82,791.
New customers increased 25% from 37,037 lifetime mortgages to 46,397 and customers intending to drawdown cash over time were up the most at 27% from 25,794 last year to 32,750.
The number of further advances where existing customers make a new application to an existing lender decreased -6% with 3,644 this year.
Releasing equity is likely if you are an older homeowner if you are forced to repay your current interest only mortgage due to your age and select a lifetime mortgage rather than downsizing your home.
Find out more about the provider products and latest interest rates to repay your current residential mortgage at this link:
Free equity release quote to repay your residential mortgage and best provider products.
Help for first time buyers can come from family members by releasing equity to a child or grandchild the deposit on their first home.
Withdrawal levels remain stable
The amounts homeowners are withdrawing from their homes has remained stable year-on-year whether for lump sums or by drawdown lifetime mortgages although you can consider other ways of raising extra money.
David Burrowes Chairman of the Equity Release Council said, homeowners are releasing equity in moderation to fulfil their financial needs.
For all mortgages lump sums were used by 35% of customers where the average amount accessed was £96,515 during the fourth quarter of 2018.
This figure is 5.5% higher than the average of £91,398 in the previous year and lower than the same quarter in 2017 of £101,913.
Drawdown is the most popular plan chosen by 65% of customers where you can take an initial lump sum and a further pre-arranged advance at a later date and the average amount accessed was £63,530.
For homeowners releasing equity that would like to keep the cost down to leave equity to beneficiaries, repaying the mortgage early is possible either fully or in part and certain product types can make this easier than others.
Buy-to-let landlords can increase their income in retirement by using a lifetime mortgage for their property portfolio as there are no interest payments to make.
With larger numbers of people releasing equity rather than downsizing could reduce the supply of properties making it harder for first time buyers and home movers to find suitable properties.
What are your next steps?
Talk to our London City Mortgage advisers if you intend to access cash as a lump sum or drawdown, we can recommend the product and manage the process through to completing the lifetime mortgage.
See what the maximum amount you can release from your home together with the leading providers and best interest rates using this link:
Free equity release calculator to show the cash you can release from your property.
At LCM our mortgage advisers can look at the whole market of provider products to match with your future objectives. Learn more by using the property value tracker chart and mortgage costs calculator.
