“An average UK property worth around £200,0001 today cost less than £2,000 in 1957, so an elderly homeowner who has lived in the same house for their whole life – and there are quite a few of them – would be sitting on £198,000 of equity,” observed Nigel Hare-Scott, sales director of Home & Capital.
“Of course, most people have moved house more than once over that time, and trading up helps you build up even more equity. The typical over-60 owns a home worth £66,000 more than the average UK property and has a whopping £265,000 of equity. That gives lots of scope for equity release."
Equity release is becoming increasingly important for people as they get older, with stock market linked investments under-performing for a number of years over the past decade, final salary pension schemes being curbed and yields on cash investments at historically relatively low levels.
Hare-Scott continued: “Many people who retired on a final salary schemes in the nineties or the early part of this decade are enjoying bumper pensions, but the next generation may be less well provided for. For them, equity release is a legitimate tool in the financial armoury. The average retired person could raise a six figure sum based on the equity in their property.
“Equity release is emphatically not an option of last resort, it is a means by which people can enhance their retirement incomes or cover specific items of expenditure – fitting a new kitchen or bathroom, buying a new car, splashing out on the holiday of a lifetime, or helping the grandchildren through university.”
