Why Is Equity Release in Demand in Jan 2022?

The Increasing Demand for Equity Release: Discover Why Now

Contributors: Nicola Date, Katherine Read. Reviewed by Francis Hui

The Equity Release Industry Is Booming. According to the Equity Release Council, One-in-Four Homeowners Aged 65 and Over Are Considering Releasing Equity From Their Home.

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Discover: Why’s Equity Release More Popular Than Ever?

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.

Increasing Demand

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.

The Equity Release Council3 noted that the number of reverse mortgages doubled in recent years.

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.

Baby Boomers

Interest Rates Are Low, So Now Is The Time To Act

Interest rates4 are low, so now is the time to act. The growth over the past few years has been great for equity release lenders as it’s allowed them to offer lower interest rates.

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.

Interest Rates Are Low

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%.

Tax Efficiency

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).

Traditional Options

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.

Future of Equity Release

Common Questions

What Are The Eligibility Criteria For Equity Release Products?

What's The Best Equity Release Product?

How Much Can You Expect To Save Using An Equity Release Product?

What Are The Tax Advantages Of Equity Release Products?

In Conclusion

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.

Editorial Note: This content has been independently collected by the SovereignBoss advisor team and is offered on a non-advised basis. Sovereignboss may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations. Learn more about our editorial guidelines.

rachel w

Rachel Wait
Personal Finance Journalist

Rachel is an experienced finance journalist and editor with a particular interest in personal finance and consumer affairs. She has vast experience writing about money issues, property, insurance, and consumer affairs, and you’ll find her articles regularly featured in top media and newspaper publications.
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Written by
John Lawson
Founder SovereignBoss

John is passionate about education and has made it his life-long mission to assist UK citizens on their future financial options, with a specialist interest in equity release, and SovereignBoss is the natural extension of this passion.

Reviewed by
Francis Hui
Senior Risk Manager

Having held various high-level roles across the industry, Francis is truly an expert in aiding UK citizens in their financial decisions and risk analysis. His unique insight and statistical knowledge make him the perfect person to help you take your financial future to the next level.
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Katherine Read
Consumer Affairs Writer

Since joining the editorial team at SovereignBoss, Katherine has become focused on bringing transparency to finances and opportunities for those approaching retirement age. She writes on the topics of equity release, home reversion, and mortgages.

Nicola Date
Writer & Journalist

Nicola is a financial writer for SovereignBoss and is passionate about the opportunities that equity release can open up for homeowners. Her extensive business experience and deep understanding of the industry means that she’s always up-to-date with the latest developments.

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