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Investors concerned after Brexit vote

Uncertainty prompts demand for equity release

Peter BoydConcerns over low-growth following the Brexit vote has led to a rise in demand for equity release products.

UK wide enquiries have increased by 44% since the EU referendum on 23 June, according to new data.

Equity Release is an option for the over-55s and enables the release of cash without vacating a property.

Since 2014, the UK Equity Release market has grown by 24% to £1.71 billion. Figures released for Scotland by The Equity Release Council show that the second half of 2015 saw the largest growth rates since 2008, with the average amount taken out via a lump sum product reaching £39,834.

 One Scottish firm has reported a surge in demand for equity release products

Managing director of Boyd Legal, Peter Boyd believes the service will continue to accelerate due to the high level of uncertainty following the outcome of the EU vote.

He said: “It is quite incredible to witness the instant impact brought about by our decision to leave the European Union.

“The upturn in equity release figures is compounded by a number of elements. For one, the Bank of England may not have responded as expected by reducing interest rates to a new record low; however savers have yielded little or no return since the 2009 – impacting retirees the hardest.

“A shortage of smaller homes emerging to the market has also limited downsizing –  and the ability to free up equity in a larger home. Add to the mix the post-vote general economic uncertainty – and the public concerned about investments – and it is little surprise equity release services are seeing unprecedented demand.”

Business development director Robin Rourke, said: “Although there was an impact around the time of the independence referendum, Brexit has been the single biggest event to impact client attitudes – with not one person failing to mention it.

“There has also been talk about equity release products coming to an end – however we are keen to support this important lifeline for pensioners on a fixed retirement income.”

Equity Release, also referred to as Later Life Advice is available in two formats. The most common is a Lifetime Mortgage where there is no repayment of the money released from the property until it has been vacated or the product owner has died.

Interest accrued is compounded annually, and will build up over the duration of the Equity Release product and become part of the final sum to be repaid.

The second format is a Home Reversion in which the customer sells all or part of the interest on the home – in return receiving money and a lease enabling them to live in the home rent free.

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