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Exploring equity release in later life

A flexible financial solution for homeowners aged 55 and above


AS RETIREMENT APPROACHES, some homeowners seek innovative ways to access the wealth in their homes. Recent research by the Equity Release Council reveals a significant rise in interest among UK homeowners over 55 in equity release options. Over three in five (61%), representing about 18.7 million individuals, contemplate using their property’s value to support their financial needs during retirement. This marks a notable increase from 57% in 2021.


UNDERSTANDING THE TYPES OF EQUITY RELEASE

If appropriate, equity release offers a flexible financial solution for homeowners aged 55 and above, with two primary types available. The most prevalent is the lifetime mortgage, where you borrow money secured against your home. The loan is typically repaid when the property is sold after death or upon moving into permanent residential care. Alternatively, a home reversion plan allows you to sell all or part of your property while still living in it until similar conditions are met.


CHANGING ATTITUDES TOWARD RETIREMENT BORROWING A survey of 5,000 UK adults, supported by Equity Release Supermarket, highlights a shift in attitudes toward borrowing in retirement. More homeowners now see it as common (39%) and acceptable (39%) to have a mortgage in later life, up from 34% in 2021. Only 26% dismissed using home equity in their older years. Almost half (46%) of homeowners aged 55 view property wealth as a key resource for addressing their later life needs.


FINANCIAL MOTIVATIONS FOR EQUITY RELEASE The motivations behind tapping into property wealth are diverse. Meeting care-related expenses (17%), boosting pension income (16%), and funding travel plans (15%) are among the top reasons for considering equity release. Additionally, supporting younger family members financially is becoming a priority. The Equity Release Council found that one in seven (14%) homeowners are interested in ‘giving while living,’ using property wealth to help family members with a deposit for their first home—another 13% aim to support other financial goals for their younger relatives.


IMPACT OF LONGER LIFE EXPECTANCY Historically, mortgages were expected to conclude at the end of their term. However, increasing life expectancy and changing attitudes have led to sustained demand for borrowing options in later life. Reduced pension provisions and savings have also contributed to this trend. As people live longer, there is a growing need to redistribute wealth, fund care, replace mortgages, or achieve lifestyle objectives. The equity release sector has adapted, offering broader opportunities to meet these evolving consumer demands.


>> WANT TO DISCUSS HOW TO UTILISE YOUR PROPERTY WEALTH IN RETIREMENT? << If you want to explore equity release further, we can provide valuable insights tailored to personal circumstances, ensuring informed decisions about utilising property wealth in retirement. Contact Omni Finance – telephone 01424 236903 – email simon.hickman@omnifinance.co.uk


The Mortgage & Property Magazine is published quarterly for Omni Finance by Goldmine Media Limited. All enquiries should be addressed to The Editor, The Mortgage & Property Magazine, c/o Goldmine Media Limited, 124 City Road, London EC1V 2NX. Please note that The Mortgage & Property Magazine does not accept unsolicited contributions. Editorial opinions expressed in this magazine are not necessarily those of Goldmine Media Limited and Omni Finance does not accept responsibility for the advertising content. Offers and promotions may have limited availability. To discover more, visit the Omni Finance website: www.omni-finance.co.uk. All Rights Reserved 2024. The content of the articles featured in this publication is for your general information and use only and is not intended to address your particular requirements. Due to the devolved administrations of the United Kingdom, the information relates to England only except where explicitly referred to otherwise. Articles should not be relied upon in their entirety and shall not be deemed to be, or constitute, advice. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of any articles.


THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. AS WITH ALL INSURANCE POLICIES, CONDITIONS AND EXCLUSIONS MAY APPLY. YOUR BUY-TO-LET PROPERTY MAY BE REPOSSESSED OR A RECEIVER OF RENT APPOINTED IF YOU DO NOT KEEP UP PAYMENTS ON YOUR MORTGAGE. MOST BUY-TO-LET MORTGAGES ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY (FCA). EQUITY RELEASE MAY INVOLVE A HOME REVERSION PLAN OR LIFETIME MORTGAGE WHICH IS SECURED AGAINST YOUR PROPERTY. TO UNDERSTAND THE FEATURES AND RISKS ASK FOR A PERSONALISED ILLUSTRATION. EQUITY RELEASE REQUIRES PAYING OFF ANY EXISTING MORTGAGE. ANY MONEY RELEASED, PLUS ACCRUED INTEREST, TO BE REPAID UPON DEATH OR MOVING INTO LONG-TERM CARE. EQUITY RELEASE WILL AFFECT POTENTIAL INHERITANCE AND YOUR ENTITLEMENT TO MEANS-TESTED BENEFITS BOTH NOW AND IN THE FUTURE.

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