BDC

With house prices increasing by 2.1% on last year, is now the best time to release your equity?

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As many baby boomers begin to  prepare themselves for retirement, one of the most common things they are now considering is seeking equity release advice to give themselves a nice retirement package.

Now is quite comfortably the right time to strike, as, despite the housing market going into lockdown this year alongside the rest of the economy, over-65s saw their property wealth increase by more than £6,000 each on average in the past year. Indeed, the total property wealth owned by over-65s who have paid off mortgages is currently valued at a staggering £1.124 trillion according to Key’s Pensioner Property Equity Index.

There are certainly regional considerations here, with many of the bigger gains coming in London (almost £26,000 better off over the last year) as opposed to the South East (gains of just £7,600). In the West Midlands, meanwhile, there was actually an average decrease of around £235 in value.

Still, generally speaking, house prices are currently at an all-time high and with COVID and the fallout of a no-deal Brexit on the horizon, that could all change very soon indeed. So, is now the right time for baby boomers to start thinking seriously about equity release? It is, after all, the most logical way for older homeowners to not only pay off their debts but give themselves a nest egg that they can use to fund a truly decadent retirement.

Will Hale, CEO at Key said: “The property market has suffered along with the rest of the economy during the coronavirus crisis and effectively shut down for months. Coupled with the ongoing political and economic uncertainty of the past few years, it has gone through a turbulent time.  However, property values seem to have remained relatively buoyant and with the current stamp duty exemption, we are likely to see continued interest from buyers.”

There are quite literally millions of over-65s who have repaid their mortgages and are sitting on considerable unencumbered property wealth but might find that their retirement pots are not quite as heavy as they had hoped for. For these people, they might be inspired to learn that the estimated property equity in these homes is as high as £212.119 billion in the South East alone and a total of £1.124 trillion in the whole of Great Britain.

In such an environment, Hale believes: “It is vital to get specialist advice and consider all assets when it comes to planning your finances through retirement as making smart choices can significantly improve your standard of living throughout later life.”

The equity release market might have seen a slowdown as people take their time to decide how best to use their wealth in retirement and negotiate this terrible virus. However, the number of customers looking to explore their options remains high and equity release remains a decidedly flexible and lucrative option.

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BDC 301 February 2023