Retirement: Increasing number of people expected to use equity release

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New research has found that 78% of advisers believe more of their customers will use equity release to support their basic retirement needs over the next year. Wayne Slater from South Liverpool’s Spectrum Independent Financial Services examines the data.

Wayne Slater, Principal Adviser, Spectrum Independent Financial Services

According to the report from more2life, 59% of equity release advisers also think that more clients will ask about releasing equity from their homes to boost their retirement income.

Understanding the potential uses of equity release in retirement is growing. The impact of the COVID-19 pandemic on retirement savings and incomes for older households is likely driving this rising interest.

Despite the expectations uncovered in this new research, 40% of advisers reported a fall in the number of equity release cases they advised since the start of the pandemic and this could be due to social distancing issues as it is an area of advice that face to face is often preferred.

However, 36% of those advisers surveyed said they had supported more equity release cases since last March, and 26% of advisers saw no change in the number of equity release cases advised.

Top 5 points to consider if thinking about equity release

• Consider all your options Make sure you are claiming all the state benefits due to you, and explore the possibility of downsizing, or renting out a room.
• Do your sums Work out what your income requirements are, and how this might change in the years ahead.
• Which features are best for you Do not assume that the lowest interest rate is necessarily the best. Any plan will have various features, some of which will be more suitable for you than others.
• Talk to your family They may be able to help or support your decision to take equity release.
• Do your own homework Unbiased information can be found via the Money Advice Service Guide to Retirement at moneyadviceservice.org.uk. (What is equity release? (moneyhelper.org.uk))

The survey also found that more than half of advisers have seen more clients using equity release to help younger family members onto the property ladder during the current stamp duty holiday. 34% of equity release advisers saw an increase in the proportion of clients using equity release to help relatives struggling financially, and 16% of advisers said clients were looking to support children or grandchildren more generally.

The research also revealed that around a third of advisers have supported a more significant number of clients using equity release to repay their residential mortgage. This gifted housing equity has gone towards helping younger family members buy their first home or move up the property ladder.

Visit our website to find out how the over-65s are sitting on £1.2 trillion of property wealth

Dave Harris, CEO at more2life, says: “The later life lending market is facing an interesting conundrum – we’ve worked hard to educate people on the role that housing equity can play in retirement, but we are also aware that, now more than ever, we need to encourage people to make smart sustainable choices for both the long and short term.

“That almost 80% of advisers expect to see more customers looking to equity release to support basic needs in retirement during the next year is not surprising. What we need to do now as an industry is to ensure over-55s get high quality advice that helps them find the best solution for their specific needs – whether this involves an equity release mortgage or an alternative option.”

Remember to take your time and only take advice from qualified and regulated firms and ensure you are provided with a full illustration of costs and charges. Do not hesitate to contact Spectrum Independent if you wish to have a no obligation chat to find out if equity release is right for you.

Equity release may involve a lifetime mortgage or a home reversion plan. To understand the features and risks, ask for a personalised illustration. Equity release may not be right for everyone. It may affect your entitlement to state benefits and will reduce the value of your estate.

B1 Business Centre, 25 Goodlass Road, Liverpool L24 9HJ
0151 448 2777 / mail@spectrum-ifs.co.uk / spectrum-ifs.co.uk

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