Equity Release Options Rise To Meet Pension Shortfalls

Equity Release Options Rise To Meet Pension Shortfalls Property Wealth And Retirement Planning

“Typically, borrowers can borrow up to 60% of the value of their home, with the property being auctioned to repay the loan after their death.”

MANY OVER-55s in the United Kingdom are concerned about their ability to retire and live the lifestyle they desire due to a lack of pension savings. However, private property wealth in the United Kingdom has recently reached record highs, implying that the average homeowner has more wealth than they may realise.

Unlocking that wealth could completely alter your retirement plans. By the end of 2020, the entire value of property in the UK will have surpassed £6 trillion, setting a new high[1]. While most private owners purchase their homes with the help of a mortgage and thus do not own 100% of their homes, the equity that they do have has also reached new highs.

PEOPLE IN OLDER AGE GROUPS

The average loan-to-value ratio in the United Kingdom has dropped to 24.6 percent (meaning that the average owner holds equity of over 75 percent in their property). As a result, the total worth of private property wealth in the United Kingdom has risen to £4.6 trillion. People in older age groups have more property wealth than those in younger age groups simply because they have paid off their mortgages for longer.

Equity Release Options Rise To Meet Pension Shortfalls halifax

GET A LOAN AGAINST PROPERTY

There are many choices available to those over 55 who want to unlock the value of their property. Equity release programmes allow you to borrow money against your home, with no repayments over the course of your life.

Borrowers can often borrow up to 60% of the value of their home, with the property being sold to repay the loan after their death. After the loan, interest, and fees have been paid, any profit will be distributed to their loved ones.

MORE PROPERTY WEALTH BEING PASSED ON

Retirement interest-only mortgages, on the other hand, allow people to borrow money against their homes and only pay back the interest. After their death, the capital, as well as the fees, are refunded, and any profit might be handed on to loved ones.

There are methods for making partial capital repayments voluntarily during your lifetime. This is useful if your circumstances change and you want to leave more of your property fortune to your children.

For people who may not have considered, or understood, equity release in the past, if appropriate, it could be an option to consider. For more information on how we may assist you, please contact us.

Leave a comment

Your email address will not be published. Required fields are marked *

Newsletter

Keep up to date — get updates with latest topics