Property Values and Equity release loan requests highest ever in 2021.
Growth in borrowing during the first six months of 2021
The equity release market in 2021 has shown a considerable increase in the amount over 55s have released from their homes.
The amount of equity released increased from £1.47bn in H1 2020 to £1.94bn in H1 2020, a 32 per cent improvement.
The average customer release from their property increased 34 per cent from £74,014 in H1 2020 to £94,982 this year.
Property rich and cash poor
The Ocean Group have reflected the general market increase over the past six months with the number of clients approaching us increasing, as well as the average value of their property and the amount they are looking to raise.
There is a well-used phrase in financial circles that some clients are “property rich and cash poor”. This applies to many clients who contact us.
They often have beautiful homes that they have lived in for many years yet have low savings balances and their income can be low.
Equity Release mortgages enable these clients to use some of the capital (or cash) in their home to release and spend on virtually anything that they want.
Although the main reason is to clear existing mortgages or other loans, a significant proportion of clients are using Equity Release to gift money to family, to fund the purchase of a new property, or to enjoy their lives more with holidays and a new car.
Why Equity Release can be an alternative to Residential Mortgages
That is one of the major benefits of using Equity Release to raise funds. The lender will be very unlikely to decide that the reason that you want the money is ‘outside of their criteria’ as it is with many residential lenders.
Provided you have the equity in your property and the property itself fits their criteria, many Equity Release lenders will consider your application.
Releasing the equity is a big decision and should be carefully considered and all other potential options considered.
It makes sense to discuss your thoughts with family and friends, and then to approach a good broker to research all your options.
As the debt can increase considerably over the term of the Lifetime Mortgage, it isn’t something that should be done without research, discussion and advice.
Another potential advantage of Equity Release over residential mortgages is that Equity Release is not affordability checked.
Many retired homeowners over the age of 55 have an interest-only mortgage that they cannot remortgage as their current income is far lower than when they were employed.
This creates the situation where they become ‘mortgage prisoners’. A Mortgage prisoner is unable to move their mortgage to a lower rate as they will not be accepted for a loan by another lender which means they can get stuck paying a higher rate of interest than they need to.
This is often at a time when their income is likely to have been lower than at any stage in their life which compounds the issue.
CONTACT US for free advice
This all means that there is an increasing number of viable options for over 55 homeowners who want or need to raise funds from their property.
The starting point should be to consider if you need to raise funds, then at an early stage in your research, approach an Independent, Whole of market advisor to provide you with advice.
There should be no cost to obtain this advice which will then clarify your potential options. At this point, you can take the time you need to carefully consider the best option for you.
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Call 01752 749656 or CONTACT US for free impartial equity release mortgage advice to help you find the best deal.