Many people who are approaching retirement or who have already retired are considering equity release as a practical means by which they can improve their financial situation. While equity release may not suit everyone, it would appear more and more people are giving this option serious consideration.
Some £1.38 billion was released by homeowners throughout 2014, and that figure is widely expected to increase this year. According to one particular provider, the reasons for releasing this cash may not be as obvious as you may think. Nearly two-thirds of customers Key Retirement came into contact with for their 2014 Equity Release Market Monitor report (63%) used at least some of the cash they released to pay the bill for improvements to their homes and gardens. This is up from 58% the year before.
The report also found that debts were another significant reason for releasing equity from a property. According to the report 30% of people opted to pay off their debts in this way. This makes sense if the alternative is to enter retirement while still paying off debts on a monthly basis. It should therefore come as no surprise to learn that around 22% of those questioned used the money to clear their mortgages.
However in some cases not all the cash released was used in this manner. In some cases people used a proportion of the cash they received for one of the purposes mentioned above. They kept the rest back to help support them during their retirement years. With an average of £64,748 released by each customer during 2014, there is clearly the potential to keep some cash back to ensure retirement is more comfortable than it could otherwise be.
Of course the average amount released is some way off the highest and lowest amounts homeowners release in specific areas. For example Londoners released £127,412 on average during 2014. In contrast Yorkshire and Humberside came in with the lowest average at £44,647 per homeowner.
As you can see though, there are a variety of ways you can use the funds you can get hold of if you do opt for equity release. Home improvements may be a real possibility for you. Conversely you may simply want to keep and invest the cash in the best possible way so you can live your retirement years without worrying about how to afford those day-to-day expenses. This is perhaps one reason why so many people use equity release to clear outstanding debts before they retire. Repayments can take a significant chunk out of anyone’s income, and when that income is replaced by a pension those payments can become even more sizeable.
Whatever reason you may have in mind for considering releasing some equity from your home in the first place, it is very likely that many others will have had the same reason before you. Think about the options in front of you and how you could make the most of the equity in your property.