New research has revealed that one in five retired homeowners are using equity release to provide financial support for their family.
According to KeyRetirement, 21% of retired homeowners are unlocking an average of £39,350 from their homes, with the money predominantly being used to help their children and grandchildren.
The study found that 44% of pensioners are unlocking an average of £20,000 from their homes to help their children, while 6% are handing over more than £100,000 to their loved ones.
With the housing crisis making it increasingly difficult for young people to get a foot on the housing ladder, many retirees are helping their children with £33,350 contributed on average towards house deposits.
Other popular reasons include buying cars, family weddings and starting new businesses. The generosity doesn’t stop there – an average of £24,780 goes towards giving grandchildren a helping hand.
Key believes the money raised through equity release is seen by many as the best early inheritance that they can give, and one which can have a dramatic effect on their families’ longer term financial wellbeing.
Dean Mirfin, technical director at KeyRetirement.com, said: “Attitudes to inheritance are changing as people recognise the many benefits of using property wealth to help their family and friends while they are still alive. By taking advantage of the tax free benefits of equity release many pensioners can control how the money is used as well as see the immediate benefits of the gift they are giving their loved ones.
“Many see this early inheritance as a much greater benefit today than their children inheriting from them later. Many retirees do not relish the thought of their children and grandchildren going without and are more than happy to step in to ease the financial pressures on younger families who are just starting out.”
A record amount of housing wealth was unlocked by homeowners in 2015 of £1.61 billion through equity release plans.
Equity release gives you access to the wealth tied up in your property without having to sell or move home. It is designed for older homeowners who own their property outright or have relatively small mortgages to pay.
You can borrow against the value of your home, sell it or part-exchange it for a lump sum or a regular monthly income.
EquityReleaseSupermarket provides comparison tables to you help research the various equity release plans available across the market.
To find out more about the latest equity release deals and how much you could potentially unlock from your property, click here.
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