Pensioners are cashing in on rising property prices in order to boost their retirement income by almost £75,000, according to equity release business Key Retirement.

Its research suggests that the UK’s house price boom is contributing to improving standards of living in retirement. A significant 61% of customers who release equity from their property use some or all of the cash to fund home or garden improvements, while 31% splash the cash on holidays.

Debt repayment still motivates a significant number of older homeowners to release cash from their properties, with 30% having used housing equity to repay unsecured debts such as credit cards or loans, and 28% repaying an outstanding mortgage. In many cases this is an interest-only mortgage where the older borrower has no other means of repaying the debt, and an equity release scheme may provide the best answer.

Huge uplift

There was also a 20% rise in the total amount of equity released by over-55s in the three months to September to £471m, with customers each releasing £75,000 on average compared with £67,500 over the same period last year. On average, those releasing cash owned a house worth £278,000.

Dean Mirfin, group director at Key Retirement, said: “For millions of retired homeowners their biggest and most successful investment is their home and it makes sense to release money now to improve their standard of living. The reasons for releasing equity are varied which highlights how older borrowers are able to meet wide ranging needs through utilising their housing equity.”