The “increasingly broad appeal” of home equity release is becoming a real wealth planning option for retirees, according to life company LV= (Liverpool Victoria).
This comes after the Equity Release Council (ERC) reported the busiest start to any year on record with £936m of housing wealth unlocked by homeowners aged 55+ during the first three months of 2019, an 8% increase year-on-year.
The total number of customers served between January and March 2019 increased by 10% annually to reach 20,397, with 10,854 plans agreed.
Andrew Gilbert, head of life products at LV=, told International Adviser: “The increasingly broad appeal of equity release shows that it is becoming a more mainstream option for homeowners to consider when planning their retirement, and we expect the trend to continue.“
“Equity release is going through a period of significant innovation.
“In particular, the market is rising to the challenges of finding more flexible solutions for funding retirement.
“For example, we are seeing innovations through product features allowing regular income, ad-hoc repayments, and products that allow interest payments to be serviced.
“This flexibility is great for those people who see their property as part of their total retirement funds or want to transfer their wealth between family generations.”
Reasons for equity release
IA reported recently on the industry promoting the use of equity release as a rival to using the pension freedoms.
In the quarterly update, the ERC also assessed the reasons why those are looking to equity release.
The ERC’s members said equity release was mainly being used by those aged 55-64 for paying off an interest-only mortgage.
For those aged 65-74, paying off home improvements and supplementing retirement income to meet general living costs made up the top two reasons for using an home equity release plan, whereas boosting pension pots was the main reason for those 75+.
Chris Knight, chief executive of Legal & General Retail Retirement, told IA: “With the industry’s busiest start to a year ever, lifetime mortgages (home equity release plans) are clearly continuing to grow in popularity.
“Unlocking housing wealth in retirement is becoming a new normal and retirees are increasingly doing it for a range of reasons.
“From paying for home improvements to helping kids onto the property ladder and even covering the cost of care, lifetime mortgages are enabling retirees to really use their home as their pension.”
