Published On: Wed, Apr 3rd, 2019

Retired workers cashing in their assets for old age | Personal Finance | Finance

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Last year the number of homeowners taking out equity release plans jumped by a quarter as they unlocked £4 billion from their homes. The over-55s released a further £8 billion under pension freedom reforms, a rise of almost 20 per cent on 2017. This is helping hundreds of thousands enjoy a better lifestyle in retirement, although the next generation may pay the price as they will receive small inheritances.


Equity release is moving further into the mainstream as the number of older people raising money against their property wealth surges.

The plans allow you to unlock the capital sitting in your home free of tax, while retaining the right to live there for life.

The most popular type of scheme, lifetime mortgages, now account for around a third of all mortgage types taken out by homeowners from their mid-50s onwards, up from less than a fifth 10 years ago.

New figures from the Equity Release Council show property wealth plays an increasing role in funding later life. In the second half of last year, almost 25,000 people aged 55 and over took out a new equity release plan and the total could top 50,000 in 2019.


The older you are the more you can borrow, with those aged 55 able to borrow a maximum 18.5 per cent of the property value, rising to 31.5 per cent at age 70 and 47.1 per cent at 90.

ERC chairman David Burrowes said equity release is helping older homeowners “fund lifestyle purchases, satisfy daily needs, support long-term financial planning or assist their families”.

He said specialist advice was essential and added: “Equity release is not a silver bullet for every retirement need, but a growing number of homeowners are finding it can be a solution.”

Will Hale, chief executive of equity release adviser Key, said older homeowners are using property wealth to transform their standard of living and support family members: “More than a quarter use some or all of the money they release to help family and friends.”


Homeowners aged 55 and over live in houses worth £290,659 on average, figures from SunLife show.

On average they bought in 1994 when the average home was worth just £51,633, which means an increase in value of a whopping £239,026.

Simon Stanney, equity release director at SunLife, said the older generation is “property rich but cash poor” as their homes have risen in value while inflation eats away at their pension pots: “Many do not want to downsize and can release equity instead.”


More than a million savers have embraced pension freedom since 2015, but experts say there has been no uncontrolled “dash for cash” as some feared.

Alistair McQueen, head of savings and retirement at Aviva, said last year’s £7.83 billion of withdrawals were a fraction of the UK’s £5 trillion pension wealth: “Withdrawal payments have also consistently averaged less than £4,000, showing little evidence of savers rushing to buy Lamborghinis.”

Pension withdrawals are taxable and many are resisting taking large lump sums in one go, as this could push them into a higher tax bracket.

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