Homeowners unlocked a record £393.9 million through equity release during the first three months of the year.
According to the latest results from the Equity Release Council, the total value of equity release lending grew by 21% in the first quarter of 2016.
The number of new equity release plans taken out in the first three months was up 6% from the same time last year. A total of 5,175 new equity release plans were taken out, the first time the number of new plans topped the 5,000 mark since 2009.
You can use equity release to gain 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.
A lifetime mortgage is a long-term loan which you can use to extract your funds in a single lump sum or in smaller amounts over time through what is known as drawdown. Home reversion plans allow you to access all or part of the value of your property while retaining the right to remain in it rent free.
There was continued momentum for drawdown which accounted for 60% of all loans, while the rest of the market was made up of lump sum mortgages. The value of home reversion plans sold remains less than 1% of the market.
Nigel Waterson, chairman of the Equity Release Council, said: “These latest figures represent a strong start to the year for the equity release market, and place housing wealth centre stage in financial planning for later-life.
Analysis from Key Retirement found the average equity release customer benefited by over £72,000 in 2015.
Dean Mirfin, technical director at Key Retirement, said: “One of the immediate factors driving the market is the interest-only crisis with large numbers of retired homeowners who could lose their properties because they cannot afford to pay off their mortgages. As many as 40,000 interest only mortgages will mature during 2016 but no one really knows the scale of shortfalls for repayment or how many homeowners have no repayment method in place at all. Many still have their heads in the sand.
“Property wealth massively exceeds pension savings for the majority of retired households and has the power to transform living standards in retirement for thousands. Independent advice is crucial to ensuring homeowners can access their property wealth on the best possible terms and with the best possible outcome.”
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