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A new way to invest in property: the rise of equity release

house prices

Using equity release to access the cash tied up in your home is a popular way for over-55s to fund retirement, but new evidence suggests it is increasingly being used to buy more houses.

There has been a significant Rise in the number of people aged over 55 taking Equity out of their existing homes in order to invest in another Property, according to new research from Retirement Advantage.

A reported 10.3% of people who used an equity release product between April and the end of June this year did so in order to make a further property investment, the figures revealed, up from just 6.6% who did the same thing a year ago, which is a rise of more than 56%.

Making new property purchases

Equity release – which can involve the release of a lump sum, several smaller amounts or a combination of both using the value of an existing property – has historically been used as a means of freeing up money for retirement. It is only available to over-55s who have a certain amount of equity in their homes, and many have been able to benefit from the drawdown after seeing strong capital appreciation in their homes over the years.

The money taken out can be spent on anything, from home improvements to new cars, holidays or gifts to relatives, but the rise in those putting it towards property investment shows a trend towards using property wealth for longer-term gains.

Alice Watson, head of product and marketing at Retirement Advantage Equity Release, commented: “We’ve seen plenty of headlines suggesting the property market has slowed in recent months. Not for over-55s, it seems. For this cohort, our figures suggest they are increasingly keen to make property purchases.”

Releasing the wealth – but not downsizing

While around three quarters of the country’s housing wealth is owned by over-50s, accounting for £2.8trn of housing equity, it isn’t surprising that this is a popular strategy for many older homeowners who still recognise the value in bricks and mortar.

Contrary to perceptions, only one in five older people are willing to consider downsizing their property, according to research, preferring instead to use their money towards long-term investment and homeownership.

Watson added: “Using existing property wealth in this way also offers further evidence that equity release customers today are proactively using the products to make major financial decisions. This reinforces the rapid maturity across this booming sector.”

The post A new way to invest in property: the rise of equity release appeared first on BuyAssociation.



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