Buoyant market for homeowners sees £11m of equity released each day from property and a record £1bn in the third quarter.
Latest report from the Equity Release Council reveals the continued growth with older homeowners aged 55 and above unlocking £1.04 billion of wealth from their homes tax-free.
Homeowners can access cash for a specific reason such as help maintain your standard of living, home and garden improvements or give to children or grandchildren for a deposit on their first home.
In the third quarter of 2018 equity release mortgage buyers accessed £195m more than the same quarter a year ago from £824m as the product range expands to attract consumers.
Equity release rates rising
There has been a rise in provider fixed interest rates for lifetime mortgages following increase in residential rates which reach record lows earlier in the year according to Moneyfacts.
The following table from Moneyfacts shows the change in equity release lifetime mortgage rates compared to the number of deals available on the market.
| Date | Equity release rates | Number of deals |
|---|---|---|
| Nov-18 | 5.10% | 128 |
| Jul-18 | 5.03% | 157 |
| Nov-17 | 5.16% | 121 |
| Jul-17 | 6.11% | 37 |
Over half of the eleven lenders for lifetime mortgages have increased their rates over the last quarter.
Rachel Springall finance expert at Moneyfacts said, this year has seen an influx of competitive rates, with the average lifetime mortgage recording its lowest ever level in July of 5.03%.
However, lenders are now starting to factor in interest rate rises, with six providers upping their rates over the last quarter, meaning the average rate now stands at 5.10%, says Rachel Springall.
For older homeowners your lender may require you to repay your loan at a certain age and rather than downsizing, if you have an acceptable property for equity release you can agree a lifetime mortgage.
Find out if your home is acceptable to providers and the best interest rates to repay your interest only mortgage at this link:
Free equity release quote to see if your home is acceptable for a lifetime mortgage.
To encourage homeowners to consider equity release, 82% of lenders offer free valuations and 41% of deals are available without a product fee.
More homeowners unlock wealth
The number of homeowners choosing to unlock wealth from their property has increased 20.4% from 17,892 in the third quarter 2017 to 21,543 a year later.
You can access money in your home by using lump sum cash upfront where you take a large cash sum and this averages £91,398 which has decreased 5% from £95,991 from last quarter.
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.
The most popular choice among new customers to release equity is a drawdown plan with 63% or 7,547 selecting this in the third quarter compared to 37% or 4,466 for the lump sum.
Home reversion plans represent less than 1% of new plans as you have to give away a share of your equity in the home which is no longer popular.
The number of drawdown plan customers that return to take more money is 8,625 increasing 25.9% compared to the same quarter last year taking a further £11,443.
If you own your property and would like to improve your quality of life by moving to the coast or live in a national park but the properties are more expensive, you can buy a new house with equity release and let the interest payments roll-up.
Family members can also release equity to help first time buyers and home movers with the deposit to buy their property now rather than wait until they have saved enough for a larger deposit.
What are your next steps?
Out London City Mortgage advisers can recommend the best lifetime mortgage to repay an existing interest only mortgage and manage the process through to provider valuation and offer.
See what the maximum amount you can release from your home to repay your current mortgage and the interest rates using this link:
Free equity release calculator to show the cash you can access and interest rates.
At LCM our mortgage advisers can source provider products to meet your needs. Learn more by using the property value tracker chart and mortgage costs calculator.
