Equity Release Hub

Can equity release help over 55s with the cost of living crisis?

Can equity release help over 55s with the cost of living crisis? main image

The buzz around equity release has been getting louder over recent years, but never so loud as in the third quarter of 2022. As the cost of living bites and inflation remains at a 40 year high, the number of new and returning equity release customers hit a new quarterly milestone of 25,519.

Although demand for equity release dipped during the pandemic, 2022 looks set to be a record year for over 55s tapping into the hard earned savings tied up in their home. And with a reported £740 billion of available equity, it’s little wonder equity release has become part of more homeowners later life planning.

Can your home be the answer to the cost of living nightmare?

The cost of living crisis has had an impact on most aspects of day to day life. An increase in fuel, energy, clothing and food prices has taken its toll on many people’s finances. However, although pockets may be empty, many over 55 years olds are sitting on what is often an overlooked source of income – their home.

British property wealth hit a record £7 trillion in 2022, with house prices increasing by around 9.5%. So there’s little wonder older homeowners’ attitudes are changing, as they look for ways to free up extra cash. Especially through their retirement years.

Equity release lets you access the money tied up in your home, freeing up tax free cash to use how you wish. There are no monthly repayments to make as the loan and interest accrued are repaid from the sale of your property once die or move into long term care.

Is equity release the best option to help over 55s with money worries?

According to the Equity release Council, lending levels throughout the third quarter of 2022 reached record levels of £1.7bn, with new lump sum customers releasing an average of £133,770 from their homes.

Whilst the money released is frequently used to make home improvements, boost retirement income or help family financially, equity release provider Canada Life’s customer data revealed that 50% of applicants through the first 6 months of 2022 released equity to clear an existing mortgage.

As David Burrows, the Chair of the Equity Release Council states, our attitudes to later life planning are changing. Speaking about the increase in demand for equity release products post pandemic, Mr Burrows said “After two years where customer numbers have been subdued by the pandemic, realising gains from rising house prices can make a major difference to people’s quality of life. Not only are more people considering equity release, but they are doing so for many different reasons and helping old and young alike to fund everyday costs and major life events. Innovation has made equity release products more adaptable to customers’ changing circumstances.”

However, equity release shouldn’t be viewed as the only answer for over 55s wanting a cash injection. As the lifetime mortgage is repaid from the sale of the property, it will impact any inheritance originally intended for family.

Having said that, equity release products do offer greater flexibility these days, with the ability to repay some, or all of the interest, keeping overall costs down. And if leaving an inheritance is important, some plans allow you to protect a percentage of the property value.

For more information, read our guide to equity release or to see how much equity you could release try the free and easy to use online calculator.


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