Homeowners aged 65 and above have seen their homes increase in value by nearly £1,000 a month over the past six months, despite ongoing Brexit uncertainty.
In total, property wealth of older homeowners who are mortgage-free has reached a record high of £1.118 trillion, equity release adviser Key’s latest Pensioner Property Index shows, with growing numbers tapping into this wealth to supplement their retirement income.
Nearly £4bn of housing equity was accessed during 2018, according to the trade body for the equity release sector the Equity Release Council. In the final three months of the year, £136 of property wealth was unlocked every second.
How much can you withdraw?
It depends on your age, the value of your property and your health. You must be aged 55 or over to qualify for equity release and your property must be worth at least £70,000. You can calculate how much you could release using the form below.
Calculate how much cash you could release from your home
The most popular type of equity release plan is a drawdown lifetime mortgage, which as the name suggests allows you to withdraw money as and when you need it, helping to keep interest costs down.
It is also possible to get a lump sum lifetime mortgage, where you release just one lump sum rather than drawing down money gradually. When you release equity, there are no monthly payments to make, but instead interest rolls up over time and must be repaid, along with the amount released, either when you die or go into long-term care.
In the final quarter of 2018, the Equity Release Council said that average instalment of a drawdown lifetime mortgage was £63,530, whilst the average new lump sum lifetime mortgage was £96,515.
How long does equity release take?
It usually takes from six to 12 weeks to release equity from your property.
You’ll need to start by seeking professional advice as this type of scheme won’t be right for everyone and it could affect your entitlement to some state benefits. It’ll also reduce the value of your estate and any inheritance you might want to leave, so it’s a good idea to discuss your plans with your family before proceeding.
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If you do decide to go ahead, your property will need to be surveyed. If the lender is happy with the valuation, your solicitor will then need to sort out all the relevant legal paperwork before funds can be released.
What do people use the equity release for?
There are lots of reasons people choose to release equity from their properties, with home improvements and holidays among the most popular.
Often it is used to clear debts or pay off an existing mortgage, or to provide children with a living inheritance, for example, to help them get onto the property ladder to cover education costs.