New figures published by the Equity Release Council’s Market Report help illustrate the value of this lending to those who choose to use it in later life.
According to the report, equity release is giving over-55s a financial boost worth more than 100 weeks of full-time take-home page.
The report found that the average initial amount of housing wealth unlocked by equity release using drawdown mortgages was £49,607 in the second half of last year.
This is the equivalent of 109 weeks of full-time pay.
They also found that the average lump sum mortgage withdrawal was £81,324.
This is more than the average full-time work receives in three years, equivalent to 179 of full-time take-home pay.
Continued strong house price growth across the UK has resulted in the ability of many properties to ‘earn’ more than the average salary.
According to the Equity Release Council, this house price growth has increased the appeal of equity release for homeowners over the age of 55.
People in this age group may no longer be working themselves, so equity release offers the opportunity to boost finances in later life by accessing the wealth tied up in their property, whilst keeping the right to live there for life.
The report found that every region in England saw drawdown customers take an initial advice worth more than one years’ take-home pay for the average full-time worker in that region.
In London, drawdown equity release customers withdraw an average of £72,858; the equivalent of 130 weeks’ pay.
Equity release customers in London withdrawing a lump sum took an average of £209,739 or 373 weeks’ income.
Commenting on the report, Helen Davies, Head of Operations – Equity Release, at Partnership said:
“Too often housing equity can be seen in isolation – a significant amount of money that has multiple uses but can be hard to relate to real life!
“The new Market Report highlights that the typical amount of equity that a person draws down is roughly equivalent to more than two years income for the average person – with the average lump sum being worth substantially more.
“This is an extremely valuable comparison as it puts housing equity into the same context as many other retirement products and illustrates just how valuable this resource is.
“The report also illustrates that while equity release is not right for everyone, it has its attractions at all ages of retirement.
“Whether someone wants to use a lump sum to clear their interest-only mortgage or drawdown a smaller amount to improve their standard of living in late retirement, it can offer a variety of different customer groups the support they need.”