For the post-war generation popularly called ‘the baby boomers’, their house has been their soundest investment. House prices have, over long run averages, consistently climbed for decades and today the baby boomers have the option of turning to lifetime mortgages to cash in on these historic gains.
British homeowners over the age of 60 currently control 25% of all property wealth in the UK, totalling around £1,000 billion. The baby boomers can and are, using lifetime mortgages more and more to help fund their retirement, make home improvements, pay off mortgage debt and fund a plethora of other life-improving decisions.
2014 was a record-setting year for the equity release industry as £1.4bn was released over the calendar year, the highest amount since records began in 1992. Taking into account the fact that living costs are rising and people are living much longer, it makes sense that those who control so much property wealth consider using said wealth to help fund the often costly experience of life after work.
Research from Prudential has shown that 1 in 5 people who retire in 2015 will have debts averaging £21,800. However, the average amount raised through equity release in 2014 was nearly three times this figure, £64,787 to be precise. For those who do retire in debt, using a lifetime mortgage to help clear these debts and improve lifestyle in retirement could be ideal.
By converting housing wealth into tangible tax-free cash, whilst also having the guaranteed right to live in your house rent-free for life, many people could ease the financial strain retirement can cause.
Lifetime mortgages are not suitable for everyone and will reduce the value of your estate, may have an impact on your entitlement to state benefits and, as with all financial decisions, should be entered into carefully.
If you are considering equity release we recommend that you read our ‘Advantages and Disadvantages of Equity Release’ page carefully and speak to one of our qualified specialist advisers.