Over a third more people in the UK aged over 50 are using equity release to make improve their home and lifestyle in the last five years, according to new research.
Equity release sales have surged by 30% over the last year, showing how older people are becoming increasingly comfortable with using the equity they have built up in their homes to improve their lifestyle and those of their families.
Older generations have increased amount of housing wealth they pass on to family and since 2012 way people choose to use this money has changed significantly according to the analysis by the Saga Equity Release Advice Service.
Perhaps fuelled by a desire for people to stay in their own home for as long as possible, home improvement has been the main reason people choose to withdraw the equity in their property since 2012, the analysis report shows.
The proportion of people using the some of the money they release for this purpose has increased by 10% over this period. Two thirds spent the money on their home and typically spend over £13,000 on things such as new kitchens or bathrooms or essential maintenance.
They are also using the money to give gifts to younger generations of their family for housing deposits, wedding costs or education for their grandchildren. The amount people have gifted to family has increased by over a quarter since 2012 and now typically stands at £33,000.
Five years ago 40% of equity release was to have an emergency but that has fallen to just 25% with people on average taking £3,600 to keep aside for a rainy day.
‘Our research demonstrates that equity release is increasingly being considered as a mainstream solution future proofing their homes and income for later life, making them less dependent on the state. That’s a big change from the traditional perception that it is limited to those who find it hard to make ends meet,’ said Gloria Barker, head of products at Saga.
‘While people are beginning to see their house as an asset to fund later life rather than something for their family to inherit, this does not mean that they are not prepared to help family out financially. By far one the biggest chunks of money they withdraw is to gift to their relatives, showing that they are keen to pass their wealth on down the generations,’ she added.
Free Property Ad – Reach millions buyers & tenants
Mortgages – Find cheapest rates from 0.98%
Landlord tax – How to save £1000s using a company
Broadband & TV – Compare Sky BT Virgin & Plusnet
Gas & Electric – Save up to £600+ in 10 minutes