In recent years, more and more people have been turning to equity release products as a way of funding their retirement. The number of equity release products increased and the number of people approaching retirement age is on the rise.
This means more people are looking for a way to fund their later life without having to sell their homes or rely solely on an income. This increase in demand for equity release products is good news for homeowners who no longer want to keep up with mortgage repayments and those who have seen the value of their property fall below what they owe on it.
Equity Release Plans Increased
With 769 different equity release plans currently available, the number of equity release products offered has reached a 15-year high.
According to research released by retirement expert Key Group1, the number of products allowing UK homeowners access to the capital in their residences has more than doubled in just two years, from 306 in 2016 to 606 in 2019.
The equity release sector has been working to restore its reputation, which was tarnished2 in the 1980s and 1990s as a result of a series of scandals that left consumers in massive debt. However, 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 Equity Release Council3, the number of product possibilities increased from 86 in January 2018 to 221 in January 2019. When there were just 38 product options on the market in 2007, data was initially electronically recorded.
Equity Release Misconception
Equity release has long been regarded as a taboo4 subject in the United Kingdom. It’s a useful product with a dreadful reputation. The industry is attempting to address this by reframing it as a retirement option and employing a comprehensive strategy.
One of the most common misunderstandings is that people use equity release to go on a cruise where in fact, it’s a great way to assist kids to get on the property ladder. Equity release could be more tax-efficient than a pension if individuals start thinking of their home as an asset rather than a piece of real estate.
Now, a group of companies is collaborating with the Equity Release Council (ERC) to improve the sector’s image. They’ll start with a whitepaper, which will be produced in the coming months and aims to dispel some of the frequent misconceptions about the product and modify people’s opinions about property wealth later in life.
Key Group’s data follows the pattern of other organizations’ research, albeit the final numbers may be a little overstated. In April, Moneyfacts5 recorded a new high for equity release arrangements. By the beginning of June, the financial information firm had counted 566 items on the market.
Common Questions
What Is the Most Popular Type of Equity Release Mortgage?
What Types of Equity Release Product Are There?
In Conclusion
The number of equity release products on the market has increased over time. This is because people are living longer and they want to be able to enjoy their money in retirement. However, with an increase in these specific types of products come more opportunities for fraudsters who would take advantage of unsuspecting victims by selling them a product that will not work as promised or even worse make it impossible for them to get out from under any debt incurred due to purchasing such a product.
To avoid this you should always do your research before deciding what type of equity release plan you need so that you can find one which best suits your needs without incurring unnecessary expenses or losing control over assets like property and investments.
Reference:
- www.ftadviser.com/equities/2021/06/21/number-of-equity-release-products-hits-15-year-high
