Heidi Start, Solicitor in Coodes Solicitors’ Residential Property team, says this could be the perfect time for many people to consider an equity release mortgage.
Sometimes called ‘lifetime mortgages’, equity release mortgages can provide homeowners aged 55 and over with a lump sum or a regular income during retirement.
In 2019, £3.92billion of property wealth was withdrawn using equity release. With an ageing population, a growing number of products and greater flexibility than ever before, I am not surprised that there is growing take-up of equity release mortgages.
We have an ageing population of home owners
It is estimated that by 2050 25% of people in the UK will be over the age of 65. With 64% of those who own their home outright being 65 or over, it is no wonder the equity release market has seen a substantial increase in demand for unlocking wealth tied up in property.
According to a report from the Equity Release Council, Government statistics have revealed that many over 50s have a strong sense of belonging to a neighborhood and are reluctant to move from their homes. Rather than downsizing and moving to a new area, many people would prefer to continue living in the place they call home.
With life expectancy now averaging 82 for women and 79 for men, we are living longer than ever before. This means that many of us have to plan carefully to ensure we can fund a long retirement. The Government have plans to make this process easier. They are creating a pensions dashboard where savers would be able to view all of their pension savings and state pension benefits in one place. This would also provide a forecast of their state pension benefits. Equity in a home is often a large proportion of a person’s assets and therefore plays an important role in retirement planning and access to the funds from the equity as well as savings locked up in a pension pot can provide a potential income stream.
There is more flexibility than ever before
Over the last 12 months there has been a substantial increase in the range of equity release products. These mortgages are becoming increasingly flexible and many now provide the option to make voluntary or partial repayments with no early repayment charge and low interest rates.
You can get specialist local advice
It is a common misconception with mortgages that you must use the provider’s own solicitor. In fact, you have the right to choose an independent solicitor of your own choice and this also applies to equity release.
It is important to instruct a solicitor with specialist knowledge of the equity release process. As a member of the Equity Release Council, Coodes specialises in equity release schemes and can assist you throughout the procedure. We will ensure you fully understand the implications of the plan you are taking out and the impact it will have on your estate and when the loan is repayable. We will also ensure that the product complies with the Equity Release Council’s Standards and Code of Conduct. That means ensuring the product is safe and reliable and that you are fully informed and protected so that you feel confident in your choice.
Covid-19 hasn’t put a stop to equity release transactions
Reports suggest that state funding will need to be significantly reduced to help the UK economy recover from the impact of the Covid-19 crisis. Although we are yet to see what this will mean for all us, it could impact on state pensions in the future. Many people are likely to now be assessing their options for funding retirement. Some reports have suggested this could lead to a growing take-up of equity release products.
With the lockdown and social distancing measures in place, we have continued to advise clients on equity release. While a face-to-face meeting is usually required, we have been successfully advising our clients on video interviews in line with the Equity Release Council’s guidance. In other words, the restrictions that are in place during the pandemic should not prevent you from progressing an application for an equity release mortgage.
For advice on these issues, please contact Heidi on 0800 328 3282 or email@example.com