Homeowners Increase Equity in Their Homes
Homeowners have increased their stake in their homes by £22.3billion in the past year to continue a trend of paying off the mortgage, which could see many enjoy more from an equity release scheme in the future.
According to the information from the Bank of England, the £22.3billion increase in equity brings the total added in the past 21 months to £36billion.
As a result homeowners who are approaching retirement or who have already entered retirement might be able to benefit further from an equity release scheme. By having less outstanding mortgage on the property, the greater value a homeowner could release.
Freeing More from Equity Release
It marks a change in attitudes that saw ten years of lending previously and suggests people are trying to balance the books. Howard Archer of HIS Global Insight told the BBC: “The seventh successive, and still marked, net injection of housing equity in the fourth quarter of 2009 is the consequence of the ongoing desire of many people to improve their personal balance sheets, given high debt levels and still serious concerns and uncertainties over the economic situation.”
Equity release schemes have the potential to unlock a tax-free lump sum to supplement income in retirement. With more being invested back into housing the more equity release schemes could become a viable option to help ease the pension issue.
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