Pensioners cash in on property
Equity release rising for retired home owners
Retired Scottish homeowners are increasingly taking advantage of equity release schemes to raise cash on the value of their property.
They raised nearly £21.6 million in the first three months of this year – more than £240,000 a day, analysis from Key Retirement shows.
Its Equity Release Market Monitor reveals that retired homeowners made around £42,380 tax-free each on average by cashing in on their homes, with sales of equity release plans up by 40% over the same period last year.
The study which also analysed the reasons for releasing equity across the whole of the UK found the main motivation for using property wealth was to fund home and garden improvements with 62% using some or all of the cash to revamp their property.
About 30% used some or all of the money to clear debts (including credit cards and loans) and a further 22% repaid an outstanding mortgage.
Families are also beneficiaries with more than one in five (22%) retired homeowners using money to help out relatives, including providing deposits to help with a property purchase. They are too making the most of the wealth in their homes for themselves as well – 32% used some or all of the money for holidays.
Dean Mirfin, technical director at Key Retirement, said: “Property wealth is making a huge contribution to retirement planning, and that is demonstrated by the growth in the value of equity being released in Scotland.
“A large percentage of pensioners are also helping family members at a time when younger generations are feeling a tighter financial squeeze and the money released from properties can really be life changing.
“However, the biggest use of property wealth is to fund home and garden improvements, underlining how property wealth can help get your home retirement ready. Equity release is a growing alternative for pensioners who are seeing their savings squeezed by historically low interest rates.”