There are some 3.9 million people across the country plan to release equity from their property to fund their lifestyle when they retire.
Research from One Family has found 19% of people over the age of 50 are relying on income from property to fund their retirement.
Across the country 3.9 million people are looking for ways of raising extra money intend to access wealth either by downsizing their home, making buy-to-let investments or unlocking capital in their home using equity release.
According to the Office of National Statistics (ONS), in the UK those aged over 50 own an estimated £2.3 trillion of the nation’s total £4 trillion property wealth.
For homeowners aged over 50 with acceptable property for equity release, it is estimated they are planning to access £37 billion equity in their homes at some point by taking out lifetime mortgages.
Large rise in property prices
One Family has reported that property is increasingly playing an important role for older homeowners with a third over 50s saying their pension and annuities will not be enough for them to live on at retirement.
The significant rise in property prices up 300% over the last 25 years has resulted in many aged over 50 gaining from large amounts of equity in their home.
With rising house prices, first time buyers are struggling to buy their first home and may be deprived of the benefit of this type of asset for their retirement.
Without family help to upsize, the only option is for home movers is to stay in their existing home and continue saving more for a bigger deposit.
The average property value is £225,000 with the number of over 50s using property to contribute towards their income set to increase from the current 15% of retirees to 22% over the next decade.
There is now a perception that investing in bricks and mortar is a better bet than pensions with 27% say their property is worth more for their retirement than their pension.
For equity release buyers a lifetime mortgage gives them lump sum cash upfront to use for any purpose such as home improvements, holidays of a lifetime or giving to a child or grandchild for a deposit on their first home.
See what the maximum cash lump sum you can release from your property and the interest rates, to improve the quality of life using this link:
Free equity release calculator with instant results to access a cash lump sum.
A quarter of those aged over 50 who plan to use their property for retirement say it is a more reliable investment than pensions and 15% say pensions simply can’t be relied upon.
Homeowners more dependent on property
A recent survey from the Financial Conduct Authority (FCA) shows that only 44% of people rely on their State pension is the main source of income at retirement.
For those yet to retire and aged over 45, only 29% still expect the State pension will be their main source of income which means many must look to other sources of income in retirement.
Currently the most common way people will use property to fund their retirement include a buy-to-let investment accounting for 33% of the retirement income for those planning this option.
About 1.8 million properties will be sold as older home movers downsize, accounting for 28% of the retirement income using this method.
Equity release is estimated to account for 28% of the over 50s retirement income and on average, a lifetime mortgage is taken out for just over £90,000.
If you are an older remortgage buyers you may be forced by the lender to repay your current interest only mortgage when you reach a certain age such as 70 or 75 and rather than downsizing, you can agree a lifetime mortgage.
Nici Audhlam-Gardiner, Managing Director at One Family said, it’s clear from the research that homeowners are seeing their property as a cash cow to fund their retirement.
With the dramatic house price rises we have seen, investing in property seems like a wise option particularly as we see income from pensions, both state and otherwise, beginning to decrease.
What are your next steps?
Talk to our London City Mortgage advisers if you intend to access lump sum cash from your property, we can recommend the equity release provider and product and manage the application through LCM.
Find out more about the different offers from the providers with the best interest rates to release a lump sum from your home at this link:
Free equity release quote for the leading products to access a lump sum from your property.
Our mortgage advisers can find the best lifetime mortgage products to meet your needs. Learn more by using the equity release calculator, property value tracker chart and mortgage costs calculator.
