You may not be aware of what equity release is, but it’s a product that can help you to get cash from your home. Equity release products are one of the only ways for retirees to get money out of their homes without having to sell them and move.
The number of products on this option has risen in recent years. Read on to make better financial decisions and plan ahead for your retirement needs.
The Number of Equity Release Products Has Increased
In the first decade of this century, there was a significant rise in equity release products. Many people are embracing these plans due to their lower monthly payments and higher potential return rates than other investment options such as stocks1 or bonds2.
The number of new equity release products has surged with 769 different types currently on offer by various providers across the UK today.
A consistent increase in demand for equity release options has fueled a surge in products on the market in recent years. Equity release sales roughly quadrupled between 2013 and 2018. According to the ERC3, the number of products increased from 86 in January 2018 to 221 in January 2019.
Now, a number of companies, notably Canada Life, are collaborating with the Equity Release Council to improve the sector’s image. The company plans to publish a whitepaper in the coming months. This paper will be used as an opportunity for people who are interested in this topic but do not have enough knowledge of it yet. It aims to dispel some of these misconceptions and change mindsets about property wealth later in life.
Statistics on the Equity Release Market
With 58% of equity release products now, drawdown has become a common feature for many homeowners. These options allow owners to make purchases that may not have been possible otherwise and provide the freedom of choice on how they want their money spent.
With downsizing protection plans now accounting for 46% of the market, more people are able to be confident that they will not have to worry about their finances after retirement.
Borrowers have more options when it comes to repayments now. If you want the option of making ad hoc4 fee-free payments, 41% of products allow this.
On 44% of loans, those who want to pay down some of the interest during the term of their loan can do so. This is great news because it helps people avoid balloon payments in the end.
The majority of mortgages are designed so that you can pay back your loan over time and in manageable monthly installments, which most people do not mind doing since they know their money will eventually go towards paying off a home equity line.
Fixed early repayment charges have been on the rise for consumers, and they now make up 57% of all products. Furthermore, 46% of plans are available to people who live in sheltered accommodation5 with 26% including inheritance protection.
How Many Equity Release Products Are There?
The two most common products of equity release are lifetime mortgages and home reversion.
What Is the Most Popular Type of Equity Release Mortgage?
Lifetime mortgages are by far the most frequent type of equity release, accounting for the vast bulk of the market. With any lifetime mortgage, you’re not obligated to make any payments and keep 100% ownership of your home.
The equity release product choice rises and it is not a surprise that the demand for this type of financial protection has increased.
Equity release products offer peace of mind to older people who are looking forward to their retirement years but needs help managing their finances and are looking to maintain as much quality of life as possible during retirement years.
The increased interest in equity release will lead to greater competition among providers which may serve consumers well. This is a great situation for those seeking out this type of loan because they can experience more choices and competitive rates that are tailored to fit them best.