On average, homeowners in the UK released an average of £80,000 through an equity release product. For the past three years, the average equity release amount has increased year-on-year, from around £60,000 upwards.
In 2018, it is estimated that overall UK homeowners withdrew a staggering £394 billion via equity release products, with sales increasing by 40% in just one year.
You can typically release up to 35% of your property’s value through equity release, with a few lenders offer higher amounts and some home reversion plans allowing you to release as much as 60%. This can be either as a cash lump sum that you receive, or as income through receiving regular instalments of equity release.
With most equity release providers, you need to meet a certain set of eligibility criteria in order to apply. Whilst this exact criteria may differ from company to company, you will usually need to be:
For the most recent statistics, the area of the country which releases the most amount of equity in their homes is in the North East. In this data collected by the provider Responsible Equity Release (RER) this region released almost three times as much equity than homeowners elsewhere in comparison.
However, the Equity Release Council (ERC) has highlighted that the demand for equity release products has risen across all UK regions. Notably, the number of approved lifetime mortgage rose by 25 per cent from 2017 to 2018 alone.
The Financial Times recently published in an article that since 2016, the equity release sector has been growing at a dramatic rate by over 7.1 per cent each quarter. In addition, in the most recent statistics collected, the amount of equity that has been unlocked by homeowners has more than doubled, from £514 million in the second quarter of 2016, rising to a whopping £1.08 billion in the last quarter of 2018.
Across the UK, property prices have risen gradually over the last decade, following the financial crisis. This has led to a renewed interest in equity release products, as for many homeowners, their home is now worth considerably more than they originally paid for it, therefore, for those not looking to move home, they have equity built into a valuable property and can release it for personal use.
Equity release is also being used as a way of raising disposable income and supplementing pensions in their retirement years. With life expectancy rates in the UK ever-increasing, and increased living costs, more and more people are looking at their property’s value to help them with money when they reach their later years.
Another popularly cited reason as to why people decide to use equity release products is in order to release cash and to help their children, or grandchildren get onto the property ladder. With housing prices rising, many young people find it extremely hard to accumulate enough money to buy their first home. Those who have the option of equity release are increasingly turning to using it to help their loved ones with this issue.
The equity release market has grown due to the increased competition in the industry including more brokers and lenders and also better awareness of the product through mainstream news and TV advertising. The Telegraph reported that there are currently 139 equity release products available for homeowners in the UK.
Those homeowners that may have passed on equity release, now consider that it is a more common financial product and it is viable way to access money in your later years.