The simple answer is that in reality, most of us actually don't know. In fact, according to a recent survey by the Equity Release Council, 3 out of 5 over 55's haven’t had their property valued for at least 18 years and as a result are seriously under estimating its value.
The research shows that nearly 18 years ago, those surveyed would have paid on average £100,756 for their property which they now estimate to be worth £257,584; an increase of almost 166%. Not bad you might think, however a more realistic valuation is actually around £346,861; almost £90,000 more than they thought.
When you consider the average private pension pot for an individual is approximately £25,000, the under estimated value of the average property alone is more than 3 times this figure. Then of course on top of that there is the other £156,828 of equity in the property.
The Equity Release Council Report goes onto say that the over 55 age group have under estimated property price growth by 50% over the past decade, estimating an increase of 21.8% when in fact according to the Office of National Statistics (ONS), the actual increase was 42.8%.
The key question – ‘how much is my house worth’ becomes even more important when we are approaching our later years and making preparations for retirement planning. At a time when state pensions are changing and the benefits of work pensions have been eroded, your property could be a valuable asset that may help make your retirement years that bit easier.
If that’s got you thinking but you’re unsure of your house’s value, why not take a look at recently sold house prices in your area on Rightmove, to see just how big your nest egg might be.
Would you use your property to fund your retirement?
If you are thinking about using the money tied up in your property to help fund your retirement, there are several ways you can go about it.
Firstly you could sell up and down size, purchasing a property for a lesser value than the one you are selling, which in turn with give you surplus cash that could help with your retirement planning.
Alternatively, you could remain living in the property and consider an equity release mortgage, which will enable you to raise typically up to 50% of its value to use as you wish.
In simple terms, it’s what is known as a lifetime mortgage; you borrow money from a provider and the interest charged is rolled up so you don't make any repayments. This will of course eat into your remaining equity but hopefully your property will continue to increase in value.
So long as you ensure that your provider is a member of the Equity Release Council, Equity release mortgages are a safe way to release capital from your property as they are highly regulated by the Financial Conduct Authority.
Many years ago this type of loan received some negative publicity, but since then, due to regulation and peoples changing attitudes, they have become a valuable tool, particularly for those on smaller pensions looking for ways to supplement their incomes or wanting to put money aside for holidays or home improvements etc.
If you are one of the many that has thought about it but never been quite sure how to get started, you can use our equity release calculator to give you some idea of how much money you could release from your property, or of course you can seek independent financial advice from a local adviser. Unbiased.co.uk can help you find a local financial advisor if you prefer to go down this route.
At the end of the day, whether you wish to down size or consider an equity release loan, it's worth finding out how much your property is worth and of equal importance, discussing your options with your family so they are all kept in the picture.