Pensioners are cashing in on their homes at a rate of £9.5m A DAY: We reveal the UK's equity release hotspots
- The South East accounted for over a quarter of all equity release sales this year
- Around £9.5million of property wealth was released every day
- Most popular use of the money was to fund home and garden improvements
Retired homeowners released £1.7billion of property wealth in the first six months of the year as the equity release market continued its rapid expansion.
Data from equity release adviser Key Retirement has revealed that around £9.5million of property wealth was released every day in the first half of the year, with 29 per cent more people taking equity release plans than last year.
The research also shows that customers are receiving an average of nearly £78,000 per plan.
Dean Mirfin, chief product officer at Key Retirement, said: 'Customer demand is driving the expansion in the market.
'More money was released in the first six months of 2018 than in the whole of 2015 as records continue to be broken across the market.'
The number of equity release plans is soaring in the UK - this map revlea(Source: Key Retirement)
The South East of England accounted for more than a quarter of all equity release sales and nearly 30 per cent of total lending.
Retired homeowners in London released an average £133,000 of property wealth each, the highest in the country, followed by the South East on nearly £90,000 and the South West on £77,000.
But every region saw strong growth in the value of property wealth released. The total value of property wealth released soared by 65 per cent in East Anglia and plan sales surged by 50 per cent in the West Midlands.
Other areas recording strong growth in property wealth released included the West Midlands at 62 per cent and the East Midlands on 56 per cent followed by the North East at 55 per cent.
The most popular use of the money released this year was to fund home and garden improvements with 63 per cent of retired homeowners spending some of the money on their houses, while 33 per cent used the cash to pay for holidays.
Around 28 per cent of retired homeowners used some or all of the money for gifts for families compared with 23 per cent in the first six months of 2017.
Around one in five cleared outstanding mortgages and 32 per cent paid off credit cards or loans.
Customers are receiving an average of nearly £78,000 per equity release plan
What is equity release, and is it a good idea?
Equity release is a loan available to over-55s that allows you to release equity from your home and remain living there. The loan is repaid when you die or are taken into care and the house is sold.
There are two types of product, a lifetime mortgage and a home reversion plan.
Borrowers choosing a lifetime mortgage can opt either to pay interest monthly for as long as they wish and then switch to a roll-up plan, or go straight to rolling interest up.
The advantage of roll-up is that there are no monthly payments, so it can be an option for borrowers with low incomes.
The disadvantage is that interest charges compound over the years which can eat into homeowners' equity significantly, leaving little to pay for care in later life or to pass on to children.
Equity release rates are also higher than standard mortgage rates as they factor in longevity risk - how long you're likely to live before the lender gets their money back.
Despite coming down over recent years, equity release rates are still between 3.6 per cent and 6 per cent and the maximum you can borrow is 55 per cent of the value of your home.
A home reversion plan allows a homeowner to sell all or part of their property for less than its market value in return for a tax-free sum or a regular income. This option allows you to then stay in the home as a tenant without paying rent.
Equity release isn't for everyone, so it's important to take independent financial advice when considering it.
Most watched Money videos
- Aston Martin unveils new Vantage sports car capable of 202mph
- Skoda reveals Skoda Epiq as part of an all-electric car portfolio
- Would you retire abroad for cheaper living costs?
- The new Volkswagen Passat - a long range PHEV that's only available as an estate
- Steve McQueen featured driving famous stunt car in 'The Hunter'
- BMW's Vision Neue Klasse X unveils its sports activity vehicle future
- Pair of rare 1980s Ford Sierra RS500 Coswotths head to auction
- MG unveils new MG3 - Britain's cheapest full-hybrid car
- German car giant BMW has released the X2 and it has gone electric!
- Mini unveil an electrified version of their popular Countryman
- Iconic Dodge Charger goes electric as company unveils its Daytona
- How to invest to beat tax raids and make more of your money
- Competition watchdog clears Aviva's £460m acquisition of...
- William Hill owner 888 agrees to flog assets as it...
- Bidding war erupts for UK telecoms firm Spirent as...
- Superdry founder Julian Dunkerton ends his pursuit of the...
- No one should expect sympathy when the crypto bubble...
- Insurers are STILL stinging drivers by undervaluing...
- Insurance market Lloyd's of London toasts best result 'in...
- Thames Water shareholders refuse £500m lifeline plea
- My friends say I'm a shopaholic but I'm 34, single and...
- Disgraced crypto tycoon Sam Bankman-Fried sentenced to 25...
- Dividend hero SAINT's manager on the best shares for...
- Spirent ditches Vivai as Keysight gatecrashes deal with...
- My blood boils when I hear critics say Waspi women should...
- Legal firm representing St James's Place customers to...
- JD Sports boss fires out at Nike for failing to produce...
- BUSINESS LIVE: Crypto fraudster SBF handed 25-year prison...
- EnQuest posts another loss after hit from oil and gas...
- MARKET REPORT: North Sea oil producer Enquest posts loss...