Equity release is known as being a great way for retirees to free up some of the cash from their home, but did you know that it can help first-time buyers, too? Well, according to a new report from Retirement Advantage, equity release has helped 13 people a week onto the housing ladder so far in 2017, as generous parents and grandparents pass on their wealth to the younger generation.
Spreading the wealth
The figures show that, in the first half of 2017, 2% of customers said they purchased an equity release plan so that they could help a first-time buyer, while at the same time, additional figures from the Equity Release Council recorded 16,805 new equity release customers over the six-month period.
This equates to an estimated 13 people each week being helped on to the first rung of the property ladder as a direct result of equity release, "highlight[ing] the scale of support first-time buyers receive from relatives, who are tapping into their property wealth alongside other savings to help loved ones purchase their first property," the report stated.
"Much has been made of the financial support first-time buyers get from relatives," said Alice Watson, head of Marketing at Retirement Advantage Equity Release, "[and] what we are seeing is that existing property wealth is a significant source of finance for that support. For the majority of over-55s, property is their single biggest source of wealth.
"People want to use the value stored away in their properties to treat themselves in retirement, in the shape of home improvements or holidays, but they want to help loved ones too. As the equity release market continues to boom and products grow in popularity, helping first-time buyers comes up consistently as a common reason for choosing to release equity – it is likely we'll see many more people become property owners thanks to equity release over the coming months and years."
Make the most of that support
Many people approach the Bank of Mum & Dad for help when buying their first home, and it seems that the Bank of Gran & Grandad is being increasingly turned to as well.
This kind of support could go a long way to securing that all-important first-time buyer mortgage, with it often being difficult to save up the necessary funds alone. After all, even though it's possible to secure a mortgage with a deposit of just 5%, that 5% can still be a hefty sum, and even with the best savings account, it isn't always that easy – particularly given the state of house prices at present.
In even better news, high-LTV mortgage rates have been falling recently, so those who are planning on supporting their loved ones are picking a great time to do so.
Sam: 6th Sep 2017 01:00:00
Lenders relax maximum mortgage age
Lenders relax maximum mortgage age If you're an older homeowner, the last few years may have been challenging if you were looking to remortgage your property.
Drawdown investors remain optimistic
Drawdown investors remain optimistic The onset of the pension freedoms gave retirees more choice than ever over how to spend their pension pot, and many are making the most of that flexibility by opting for income drawdown, whereby their pension savings remain invested in the stock market. Yet this in itself can pose risks, particularly given how volatile the stock market can be, but luckily, investors don't seem to be put off.
Equity release lending hits record £3.6bn
Equity release lending hits record £3.6bn 2018 proved to be another record year for the equity release sector, with latest figures revealing that retired homeowners released £3.6bn in property wealth over the year, the highest annual total ever seen – and by all accounts, 2019 could go even better!
Motivation to remortgage at 11-year high
Motivation to remortgage at 11-year high The financial incentive for mortgage borrowers reaching the end of their current fixed rate deal to remortgage to a new deal has soared to an 11-year high.
What's coming up in 2018....