As property continues to increase in value, equity release has become a popular choice for homeowners who want to release the cash tied up in their home. There are now more people using equity release to increase their retirement fund and pay off their mortgages.
According to figures by Responsible Equity Release, 39% of homeowners released equity in their home in order to pay off their mortgage or a debt. The average amount released was £102,078. However, equity release is also often used to fund renovations to the home, holidays and other lifestyle events, but clearing debts and the mortgage frees homeowners from having to worry about making monthly repayments, especially as interest rates are still so low.
There are now more people moving into retirement while still paying off a mortgage and other debts. As property prices continue to rise, saving a deposit for a first home has become a challenge which takes far longer than it used to. More people are buying their first home later in life, and taking out longer term mortgages which last into retirement.
The two main types of equity release are home reversion plans and lifetime mortgages. The minimum age for a lifetime mortgage is 55 years old, and 65 for a home reversion plan. There are many pros and cons to consider before applying for equity release, and it is advisable to seek professional advice. If you are considering equity release solely to pay off your mortgage, it may be possible to switch to a fixed rate mortgage with a lower interest rate as an alternative. A CeMAP qualified mortgage advisor who also has their CeRER qualification for equity release will be able to advise whether this would be possible.
