It’s been revealed that the number of people turning to equity release ahead of retirement is on the rise. It seems like more and more people are looking for a way to fund their retirement, but don’t want to sell their homes or worry about paying off debts before they retire.
Homeowners nowadays recognize how important becoming financially independent is during their later years. Equity release offers them an easy solution as it lets them keep living in the home until they pass away while securing funds for future years without selling up.
Retire Early With Equity Release
Homeowners are turning to equity release as a cash-free option for retirement. This product has been considered by many homeowners years before their actual retirement date, giving them peace of mind that they have made the right decision in advance and won’t be left without any resources at all.
In a March study of 1,020 UK homeowners, Canada Life discovered that 12% planned to release equity as an extra to their retirement income. The average age of individuals who said they would contemplate1 releasing equity was 66, two years before they would be eligible for retirement.
The majority of those surveyed by Canada Life were in their 40s, and their pension age will rise to 68 between 2044 and 2046 as a result of recent changes to pension legislation. A full basic state pension currently pays £179.60 per week, or £9,350 per year, according to the most recent government figures.
Due to the loss of final salary pensions and still inadequate2 savings rates, many more people will look for ways to supplement their retirement income.
Reasons Why People Use Equity Release
The increase in the state pension age3 has merely shifted the goalposts for many people who had intended to retire at the age of 66. People may look into house financing to help support the additional two years.
As consumers take a more holistic perspective of their retirement, the average age of an equity release customer has been gradually falling. Home equity is no longer a last-resort commodity, and it can be a valuable addition to retirement planning, alongside pensions.
While clearing an existing mortgage4, completing property upgrades, consolidating unsecured debt, and establishing an emergency fund were all examples of uses for equity release, there were many more.
Demand for Equity Release
The equity release sector suffered a hit in the 1980s and 1990s as a result of a series of scandals that put consumers in massive debt. However, in recent years, demand for equity release options has rapidly increased, resulting in a flood of goods on the market.
Equity Release Council, which was established in the 1990s to help the struggling industry get back on its feet, is attempting to legitimize the sector and its product suite by serving as a recognized seal of approval on suppliers’ websites.
Does Equity Release Affect Your Pension?
Equity release has no impact on your private or public pension. The guarantee credit portion of pension credit, which supplements the statement pension to boost retirees’ weekly income, may be impacted.
What Is the Best Age To Take Equity Release?
Equity release lifetime mortgages are only offered to persons over the age of 55, and home reversion plans often need you to be considerably older than 60 or even 65. However, persons under the age of 55 can benefit from alternatives to equity release, such as loans and remortgaging.
There are many people that have been looking for a way to create some financial stability in the later years of their lives. The number of people turning to equity release ahead of retirement is increasing, and it’s not hard to understand why.
Equity release combined with other income sources can help provide an improved quality of life during retirement without needing any extra work. It’s an easy and secure investment with no risk or commissions if you remain in your home until your retirement day.