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Average equity release sum equals two years’ pay

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18/03/2016
Over-55s withdraw over 100 weeks’ full-time pay from their homes with equity release plans
Average equity release sum equals two years’ pay

Equity release provides over-55s with a sum that typically totals more than 100 weeks of full-time take-home pay, according to the Equity Release Council.

The average initial amount of housing wealth unlocked by equity release customers via drawdown mortgages in the second half of last year was £49,607, the equivalent of 109 weeks’ or more than two years’ pay.

The average lump sum mortgage withdrawal was £81,324: more than the average full-time worker takes home in three years (179 weeks).

Strong house price growth across much of the UK means many homes can ‘earn’ more than the average salary. This increases the appeal of equity release for homeowners over the age of 55, to improve their finances in later life by unlocking wealth tied up in their home.

Regional split

Every region in England during saw drawdown mortgage customers take an advance worth more than a year’s take-home pay for the average full time worker in that region, in the second half of last year. In London, drawdown customers withdraw the equivalent of 130 weeks’ pay (£72,858).

For lump sum customers in all UK regions except Scotland – where 91 weeks’ worth of pay is released – the average withdrawal of housing wealth was equal to more than two year’s take home pay. London again had the greatest sums taken out: £209,739 or 373 weeks’ income.

Nigel Waterson, chairman of the Equity Release Council, said: “Equity release products continue to prove versatile in helping customers meet a range of financial needs before, at and during retirement. As a result, there is growing recognition from UK consumers, regulators and politicians that housing wealth can – and should – play a greater role in financial planning for retirement.

“Greater choice from new and existing providers is driving the appeal of equity release, with product features emerging that allow more freedom to make capital repayments and pay interest on some loans. We expect this trend to continue, and the challenge for industry and regulators is to ensure product innovation is combined with consumer protection and long-term sustainability.”

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