Equity Release and the cost of living crisis

Equity Release and the cost of living crisis main image

As headlines report inflation reaching a 40 year high the cost of living crisis is fast becoming a real concern for millions of UK households. With sky high energy bills, record fuel prices and price hikes across many products and services, families throughout the country are looking for ways to save money and boost their income.

Equity release is one way over 55s can ease the pressure of the financial crisis. With over £740 billion of equity in their properties, it’s not surprising that a growing number of older homeowners are turning to their property as a financial lifeline, especially as house prices continue to rise.

The property goldmine – the savings you didn’t know you had

British property wealth reached a record £5.2 trillion by the end of 2021, with the Land Registry reporting a rise in house prices of almost 10%. That’s £1million added to the value of UK housing every minute.

Equity release helps over 55s tap into that property wealth, letting you access the money saved in your home to use as you wish. Perhaps to increase your retirement income, pay off an existing mortgage, make home improvements or help family financially.

Speaking about equity release and the cost of living, Chair of the Equity Release Council David Burrows said: “After years of putting money away in bricks and mortar, older homeowners are turning the tables and taking funds from their homes in order to boost their retirement income, meet one off costs and gift a living inheritance to family.”

“The equity release market’s return to growth is part of a wider pick-up in later life lending activity, and the flexible design of modern lifetime mortgages gives customers more ways to manage their finances and access life-changing sums of money at a lower cost.”

How can equity release help with the cost of living crisis?

Equity release lets you access the equity tied up in your home. To be eligible you need to be 55 or over and own your own home. You may be eligible if you have an existing mortgage however this will need to be repaid with the money you release.

The amount you can release will depend on your age and the value of your property. According to the Equity Release Council, in 2021, over 55s drew an average of £125,000 through equity release, which is the equivalent of withdrawing seven years of retirement income.

With an equity release lifetime mortgage, there are no monthly repayments. Instead, both the loan and interest are repaid from the sale of your house once you die or move into long term care.

Equity release now offers greater choice and flexibility

There are now over 300 equity release products available with rates of 4% or less andvarious options including downsizing protection and penalty-free partial repayments, giving customers the flexibility to reduce their loan size and borrowing costs should their circumstances change.

Equity release has played a part in thousands of UK homeowners retirement solutions, driven by greater awareness, lower interest rates and tighter regulation. Now as the harsh reality of the cost of living crisis bites, demand for equity release can only grow as our attitude to property wealth, our needs and those of our family, change.

If you found this article interesting, you may also like ‘Is equity release a good idea?’ and ‘The pros and cons of equity release’.

ashley shepherd expert author

This article was written by Ashley Shepherd, Managing Director and founder of Simply Equity Release, the specialist later life planning website. With more than 30 years’ experience in financial services, Ashley is a recognised name in the equity release industry.

Learn more about Ashley.

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