Equity release borrowers take an average loan of £77K
Retired homeowners are borrowing an average £76,967 as the equity release market continues to grow, according to equity release adviser Key.
Customers released nearly £5,500 more on average in the three months to 1st October compared with the same period last year (£71,483).
The total value of new property wealth released in the three months increased by 25% on the previous year to £933.9mn and the number of plans sold grew by 16% to 12,133.
What’s the money for?
Two-thirds (66%) of equity release borrowers said they used some or all of the cash to improve their homes or gardens – often ‘age proofing’ them to ensure they are able to stay in their homes.
Over a quarter (27%) gifted some or all of the money to help family or friends and 30% used the proceeds of equity release to repay unsecured debts.
Will Hale, CEO at Key, said: “The substantial amounts that customers are able to release highlights how vital property wealth is to retirement planning and the expansion is being driven by customers realising they can address a wide range of financial issues. Paying for home and garden improvements which often help people to ‘age-proof’ their home remains the most popular use of money with 66% releasing wealth for that purpose.
“However, clearing debt is still a major concern for customers – 30% paid off credit cards and loans with the money they released while 21% were clearing outstanding mortgages. Over a quarter (27%) also chose to gift some or all of the proceeds of equity release to friends and family.
“Increased flexibility of equity release plans means older homeowners can use their money in the most appropriate way for them and their families and independent expert advice is key to ensuring they can do so.”