Equity Release Plans Start To Increase Again
The number of equity release plans taken out by homeowners in the three months from July to September has increased when compared against the previous three months. This is according to research undertaken by Key Retirement Solutions (KRS).
It is reported that during the third quarter of this year 6,123 equity release plans were taken out, a 19% growth against the previous three months (5,143).
This encouraging upward curve suggests the industry is recovering despite the recent withdrawals from the market by some high profile equity release lenders. However, when compared with last year, equity release lending remains down.
£214m Equity Released by Homeowners between July and September
As well as the number of plans increasing, the amount of equity release lending also saw a rise. In the third quarter of this year £214million was released compared to the £188.9million of the previous three months.
This remains down on the previous year with drawdown products accounting for this as they constitute 65% of all plans. Drawdown products have become popular as they allow homeowners to take money from their plan when they need it. This has seen a slump in lump sums being released when an equity release plan is taken out.
Clearing Debt the Main Incentive for Equity Release
As equity release plans become more popular and with the limited finances available at the moment, many homeowners are choosing to release equity to clear immediate debt and a smaller percentage are using it to pay-off the mortgage.
Between July and September 36% of equity release plans were used to clear non-mortgage related debt, up 7% from the previous three months.
Additionally, homeowners wanting to pay-off the mortgage accounted for 23% of all plans taken out, up from 15% in the previous three months.
Equity Release a Serious Consideration for Greater Income
Dean Mirfin, group director at KRS, commented: “Whilst a number of providers have temporarily had a break from the market of late we expect that a number will soon return, stronger and wiser.
“The demand for greater income or capital in retirement is continuing to grow and as a result equity release has to be a serious consideration for anyone who wishes to boost their provision in, or approaching, their retirement.”
By consolidating your existing unsecured debts, you may extend the term and overall cost of these debts.
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