The equity release industry is booming and is more popular than ever!
And there are countless reasons why. If you don’t act fast, you could miss out on incredibly low interest rates, astonishing deals, and a life-changing retirement, all simply by unlocking the cash tied into your home.
We’ll help you discover:
- The core reasons behind the increasing demand for equity release.
- When’s the best time to unlock the cash tied into your home.
- The tax benefits of equity release.
As leaders in the field of equity release, we’re constantly reviewing the market and keeping up to date with the latest equity release news. We’ve analysed over 220 plans to determine the reasons behind industry growth.
So, are you wondering why equity release is more popular than ever? Let’s take a look!
Increasing Demand for Equity Release
More and more retirees are turning to equity release to pay off their debts.
Carrying crippling debt into retirement when you have no regular salary to pay it off, can be incredibly stressful.
In addition, you might also owe taxes on capital gains1 and want some of your assets released to decrease the amount of taxes owed. Whatever the case may be, there is no doubt that demand for equity release has been increasing lately.
With a recession being a constant fear, many retirees are trying to think ahead of the game. We all want optimal security when it comes to our finances, and avoiding bankruptcy2 if a recession should hit.
In addition, retirement can often be a lot more costly than anticipated, leaving retirees in the dust. Equity release is a fantastic opportunity to recoup lost finances to help you through your remaining days.
The Demand from Baby Boomers Is Driving Equity Release
Baby boomers looking to supplement their income or receive additional benefits will often look into taking out a reverse mortgage or another form of home loan product like equity release, which can offer you tax-free monthly payment.
It should be no surprise that equity release is more popular than ever with baby boomers looking for a way to supplement their income or receive additional benefits, and it’s not just because they’re older. They are also facing increased taxes and medical expenses, and living costs that have climbed higher than expected.
Interest Rates Are Low, So Now Is The Time To Act
As a result, some experts predict that equity release volumes will reach heights last seen during the 1990s.
The increased affordability, coupled with a need for retirement income in later years, means that equity release will be more popular than ever before. Equity release products are by no means new – they have been around since the 1980s. Although they have a dubious history, they successfully attracted investors into this space because of their low-risk profile.
Offers Tax Efficiency
Equity release offers tax efficiency5 too. This is because you’re able to use your home value without having any capital gains taxes applied – it’s a substitute for an annuity, so if you were using that instead, there would be no such exemption on the income or capital gains. They could push up your tax rate by as much as 40%.
Traditional Options Aren’t Working Anymore
One of the things that makes equity release a more attractive option these days is that traditional options just aren’t working anymore. For instance, annuity rates have been on a steady decline for years, which means that they’re not an effective solution to retirement income needs as much anymore – in fact, the demand for them is plummeting because of this.
For those considering equity release products like mortgages secured with their home property or reverse mortgages instead of an annuity, it’s important to know what you need and make sure that you can provide these before committing to any product (and even then, there will be some conditions).
The Future Looks Promising Indeed
The future of equity release looks promising because it offers a lot more than just living without any monthly bills. The idea that this is the only thing equity release does isn’t accurate – there are many different benefits, including tax efficiency and eligibility criteria, which make it worth considering if you need retirement income.
As interest rates on annuities drop and demand continue to decline, people who have been relying solely on their annuity will be looking at other options like reverse mortgages or equity release products (mortgages secured with property) as an alternative option.
What Are The Eligibility Criteria For Equity Release Products?
Equity release isn’t just about getting out from under your bills, though – it also has other benefits like tax efficiency and eligibility criteria! They depend on how desperate you are, too, since interest rates vary depending on how bad things are with your finances.
What's The Best Equity Release Product?
That depends on what you’re looking for in an equity release product – the best one will be specific to what you need and can provide. It’s important to find out more about them before committing because there might be conditions that could mean they’re not a good choice for you.
How Much Can You Expect To Save Using An Equity Release Product?
It all depends on whether or not you have any debts, a mortgage, etcetera, as well as the amount of equity available in your property but generally speaking, people who take out these types of loans should expect significant savings.
What Are The Tax Advantages Of Equity Release Products?
The best thing about these types of loans is the tax efficiency – it means you’re able to invest your money without worrying about paying taxes on it, so there can be a lot more savings in the long run.
On top of this, because they offer an upfront payment instead of periodic payments, people have been saving thousands in annual tax costs over time.
A study by the Equity Release Council found that more than half of Britons aged 55 and over have a home equity release product.
The council also reported that 40% of people who took out an equity release plan could not repay their mortgage debt because they lost their jobs or needed money for medical care.
People are increasingly turning to this type of financial planning as we age to maintain our independence without sacrificing our homes. There is a lot to think about when considering whether you should take on this kind of risk with your finances. Also first check the equity release alternatives.