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  • By Tom Philips at October 31, 2022

UK Equity Release Statistics

If you are sceptical about how equity release can help homeowners in the UK, the best thing to do is look at the statistics. More and more people are using equity release products as the scheme becomes safer and more flexible.

In case you are not familiar with equity release as a scheme, here is a general outline before we get into UK equity release statistics.

In the UK, homeowners above the age of 55 can release funds from their property, provided that it is worth £70,000 or more. They will receive a loan that does not have to be repaid while they are alive, meaning they can spend the money on anything of their choosing.

There are two main equity release products that consumers can choose from: home reversions and lifetime mortgages.

The latter is much more common, as you will see in our UK equity release statistics, but home reversions are growing in popularity nonetheless.

People generally view equity release as a retirement scheme. This stereotype has some truth in it, as most equity release consumers are either retired or are heading towards retirement, and they use their funds to make their retirement as comfortable as possible.

However, some equity release consumers take out equity while they are still working, so equity release does not have to be carried out purely for retirement.

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What Were the UK Equity Release Statistics in 2021?

2021 was a hugely significant year for equity release. There were more equity release customers than ever, and in total, they released £4.8 billion from their homes (1).

We cannot skim over the fact that the COVID-19 pandemic negatively affected equity release, as well as most other schemes. This means that there was a dip in activity in 2020-2021.

However, in the second quarter of 2021, the equity release scheme had already recovered from the impact of the pandemic, and the number of customers releasing equity returned to normal.

It is predicted that 20,352 customers got involved with equity release between April and June 2021, which helped to restore the figures back to normal (2).

In terms of the rise in property wealth post-pandemic, it has been stated that there was a 2% increase in the second quarter of 2021 compared to the first quarter, and a 67% increase compared to the second quarter of 2020 (3).

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How Many Equity Release Plans are Available in 2022?

As of the second quarter of 2022, equity release consumers can choose between an impressive 1557 equity release plans, which is 518 more than in 2021 (4).

Lifetime mortgages and home reversions remain the most common type of equity release scheme. However, there are a wide variety of plans under the umbrella of equity release lifetime mortgages and home reversions.

For example, there are eight main types of lifetime mortgage: the voluntary repayment plan, the interest-only plan, the income plan, the lump sum plan, the drawdown plan, the buy-to-let plan, the second home plan, and the enhanced plan.

However, even each of these equity release plans can be very different depending on which equity release lender you are with. This is because the lending criteria will vary.

For example, some lenders charge higher interest rates than others, some provide downsizing protection, some offer inheritance protection, some charge for early repayments whereas others encourage this.

The beauty of equity release is that there is plenty of flexibility. You can choose from thousands of equity release plans, so you never have to enrol on a plan that does not meet your needs.

With more and more equity release arrangements being created each year, the scheme will only become more personal, allowing homeowners to select a plan that suits their individual circumstances.

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Which Locations Have the Highest Demand For Equity Release?

Equity release is growing in all areas of the UK. However, in certain areas, the demand is rising more rapidly.

In regions such as the South East and London, the demand for equity release has doubled since 2013, with a 143% increase in the South East and an 138% increase in London (5). This represents the largest increase in equity release in the UK.

Other regions have also seen twice the demand for equity release over the past nine years, including Northern Ireland (112% increase) and the East Midlands (100% increase).

Some other regions that have seen a huge increase in demand (though less than double) include: the South West, the West Midlands, the North East, Yorkshire and the Humber, Wales, Scotland, and the North West.

In terms of releasing equity in towns vs cities, we would generally say that equity release is more fruitful in large cities. This is because property in urban areas is likely to be more valuable, so you could access a larger loan if you released equity from your home in the city.

What’s more, there is more availability in the cities when it comes to equity release lenders. This means it may be easier to find a lending criteria that accommodates you, as well as an equity release plan that is right for you and your family.

That being said, it is definitely possible to take out equity from a rural property, particularly if it is in a desirable location.

Statistics show that people all over the UK are getting involved with equity release, so do not discount the scheme if you live in the countryside.

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What is the Average Amount that People Release From their Homes?

You can release 20-60% of equity from your home by taking out an equity release lifetime mortgage (6). People who release 60% tend to be older than the average equity release consumer.

In 2017, it was announced that equity release consumers accessed an average of £67,735 by taking out a lifetime mortgage or having a home reversion (7).

To find out how much equity you could take out of your property, use our free equity release calculator. All you need to do is input your property value, property type, and your age, and you will discover how much equity you could be entitled to.

If you come to us for a personalised quote, we will be able to make this calculation even more accurate by taking the value of your home and deducting any existing debts that you owe, such as a traditional mortgage.

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How Much Do People Release Through a Lifetime Mortgage Vs a Home Reversion?

As we have explained, you can release 20-60% of equity from your home with a lifetime mortgage. To be more specific, if you take out a mortgage at 55 years old – the minimum age – you could release up to 27% of your property (8). This percentage would of course vary depending on the value of your property.

The older an equity release consumer is, the more they can release, so this percentage gradually increases until it is capped at 58% of equity for 82-year-olds (9).

As for home reversions, you will receive 20-60% of your home’s market value, unrelated to your age and dependent on your property value (10). However, the minimum age requirement for home reversion plans is higher, at 65 years old.

At first, it may seem that home reversions are more fruitful than lifetime mortgages, as you could access more money from your property. This is true for some people.

However, with a home reversion, if your property rises in value over the years, you do not reap the benefits of this as you will have sold a share of it to the equity release lender.

On the other hand, if this happens after you have taken out a lifetime mortgage, your family would be left with more money after the property sale as the equity release lender would only take enough money to cover the cost of your loan.

Something else to keep in mind is interest. You do not pay any interest on a home reversion as it is a simple case of selling your home and receiving a tax-free lump sum of cash in return.

However, interest is an important part of lifetime mortgages. If you select a plan that does not include repayments, which is most equity release plans, the interest will steadily increase and you would be charged compound interest on your loan at the end.

You could combat this by getting an interest-only lifetime mortgage and repaying the interest each month. However, if you did this, you would have to be able to rely on another source of income to repay the interest i.e., a pension or savings.

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What are People Using their Equity Loans For in 2022?

The most common reason for taking out equity in 2022 has been to pay off existing debts, particularly traditional mortgages (11).

The reason this option is so popular is that equity loans do not need to be repaid, so it is a great way to get out of debt. 43% of equity release customers spent their equity loan on clearing debt.

The second most popular reason to release equity in 2022 was to fund home improvements, including garden improvements. 24% of customers did this in 2022.

This is a great idea for anyone who is heading towards retirement, as it is the perfect opportunity to ensure your home is fitted out for retirement. This may include installing disabled-friendly equipment or expanding rooms.

13% of equity loans were put towards everyday living costs, which includes paying bills, transport, and food. Many pensioners choose to do this as their pension does not cover their living, so they depend on their equity loan as a reliable monthly income.

It was also popular for people to gift funds to their family via equity release, with 12% of customers choosing to do this. They may do this to avoid inheritance tax, or simply to help out their loved ones who would not be eligible for equity release due to their age or lower property value.

The penultimate most common reason to take out equity in 2022 was to purchase a car. People may do this as a way to avoid the repayments that come with car loans and leases. What’s more, many people cannot ever afford to purchase a brand-new car, but equity release can open up this opportunity to them.

Finally, 2% of equity release consumers bought a family holiday with their equity loan. Many people reach retirement and realise that they have spent most of their life working, perhaps to the detriment of their family life. Taking their loved ones on holiday can be a great opportunity to spend quality time together.

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What Was the Average Age of an Equity Release Consumer in 2022?

Though the minimum age that someone can take out equity is 55, most equity release consumers tend to be older than this.

We do not have the figures for 2022, but in 2020, the average age to take out a lump sum lifetime mortgage was 68 years old, and 70 years old for a drawdown lifetime mortgage (12).

It is expected that this average age will decrease over the years, as more people are using equity release as a way to help out younger family members with things like paying rent, house deposits, and weddings.

However, the reason we don’t tend to see many 55-year-olds releasing equity is that they would end up owing a huge amount of interest by the end of the scheme, given that the scheme only finishes when the customer passes away or goes into long-term care.

As for much older homeowners, they are excluded from certain schemes by equity release lenders as they would be paying less interest in total, which means it is less beneficial for the lender to offer a loan to them.

However, older homeowners can sometimes qualify for schemes that offer benefits based on their age, such as the enhanced lifetime mortgage. If we see more schemes like this over the next few years, it is possible that equity release will become more common for people in their 80s.

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What Was the Average Property Type For Equity Release in 2022?

We know that the most common property type for equity release in 2022 was freehold houses.

Some people managed to take out equity from leasehold properties, but this tends to be more difficult as there is more paperwork involved and there has to be enough time left on the lease.

As for retirement apartments, they are accepted by some equity release lenders, but only under certain circumstances. Properties linked to commerce may be rejected, as well as studios and basement flats.

It is also often required that there is a lift in any block of apartments with more than four floors.

Which Month Was the Most Popular For Equity Release in 2022?

The most popular month for equity release in 2022 was March (13). However, equity release advisers received the most enquiries in January, which may be linked to people reflecting on their finances in the new year, and growing concern about the rising cost of living (14).

Generally, we advise our clients to start their equity release journey at the beginning of the year, as this is when the interest rates tend to be the lowest.

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Which Equity Release Plan Was the Most Popular in 2022?

In 2022, drawdown lifetime mortgages were the most common equity release plan, making up 55% of plans taken out by customers (15).

Perhaps this is down to drawdown plans allowing customers to access both an initial lump sum, and regular payments, so they do not have to decide between the two.

The next most popular plan was the lump sum lifetime mortgage. This plan boasted low-interest rates, partly due to its high availability and popularity.

It is also a great plan for customers who want to purchase a one-off expense that is very costly, such as a car or a luxury holiday, as they can make the purchase immediately rather than having to save up their tax-free cash.

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How Did Equity Release Change in 2022?

The main change in the equity release scheme is the simple fact that so many new customers got involved. This can largely be attributed to the higher cost of living, as many pensioners now need to rely on different sources of income to fund their retirement.

Another change is the sheer amount of new equity release plans available. This is attracting more customers all over the UK, as they are realising that equity release may benefit them in a way that it previously couldn’t.

Another interesting change to equity release in 2022 is the new concept of all new lifetime mortgages incorporating penalty-free voluntary payments of the interest and the loan amount (16). Though this comes with a maximum annual cap, it is still transformative for the equity release industry.

This is because customers who were previously concerned about not being able to commit to equity release will now be able to get involved with the knowledge that penalty-free repayment is always a possibility.

Previously, if equity release consumers wanted to put an end to their plan, they would often have to pay back 25% of the loan amount. Now, this will never happen for customers with lifetime mortgages, so they will be able to quietly exit the scheme if necessary.

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How is Equity Release Expected to Grow in 2023?

As the trend from 2021 to 2022 saw many more new customers seeking equity release, it is expected that this will continue in 2023, along with the creation of new equity release plans for new and existing customers.

The chairman of the Equity Release Council, David Burrowes, has stated that equity release has shown signs of ‘stability and durability’ in 2022, and we imagine that this will only continue in 2022, as the scheme wins over more customers who are reassured by its growing popularity and proven safety (17).

As for the opinion of financial advisers, 80% predict that there will be new growth in the equity release industry in 2022, and 50% say that they have received more equity release enquiries in 2022 than ever before (18).

We predict that this is due to an increased awareness of the equity release scheme, an increased level of confidence in the scheme, and growing fears over the 2022 cost of living crisis.

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Getting Involved With Equity Release in 2023

We would encourage anyone who is eligible to consider getting involved with equity release in 2023.

There has never been a better time to start your journey, given that there are so many new equity release plans to choose from, as well as a wide variety of equity release lenders who are offering their services in all regions of the UK.

If you have not been convinced by the inspiring UK equity release statistics 2022, allow us to inform you of the many benefits of the scheme in a free consultation. We will also be able to advise you on what you can do if your situation is slightly complicated.

For example, if you have an existing mortgage, we will help you to figure out how you could still release equity. This would usually involve either paying off your mortgage with the income you currently have, or using your equity loan to pay it off.

Another example is that you may be too young for equity release. There is unfortunately not much we can do in this situation, as the minimum age requirement is the same for every lender and plan.

However, we would be able to give advice on how you can prepare for equity release so that you can complete the application process promptly when you reach the minimum age.

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Top Tips For Preparing For Equity Release in 2023

For now, get thinking about whether you are eligible for equity release. The main things to consider are whether you are 55 years old or more, whether you are a homeowner, and whether your property value is £70,000 or more.

If you are not eligible, get in touch with us and we can confirm this. We may be able to suggest solutions for improving your eligibility, and if we can’t, we will advise you on how to pursue the alternatives to equity release.

Another tip is to have a look at the different equity release plans that are available and think about which ones may be well-suited to you depending on your financial situation and how you want to spend your loan.

You may not be eligible for every single plan, so we advise making a list of your preferred options before meeting with us. If not, we would be happy to introduce you to the different plans over the phone.

Finally, consider what you would want to spend your equity loan on. This may be a combination of things, such as a luxury holiday and a new car, or it may be a consistent expense, such as paying the bills on a monthly basis.

If you cannot decide where you want the money to go, our equity release specialists can help you to narrow down your options.

To remind you of some of the common reasons to release equity, they include: paying off debts, home improvements, gifting to loved ones, buying holidays, buying cars, and contributing towards everyday living costs.

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Can I Release Equity in 2023 On a Low Income?

Please be reassured that you do not need a high income or an excellent credit rating to get involved with the equity release scheme. Most of the time, lenders are much more concerned with the value of your property than anything else, so just make sure this is £70,000 at a minimum.

Some equity release providers will check your credit rating and income, which can improve your chances of accessing a higher loan. However, this is not part of the application process for all lenders, so it is certainly feasible to take out equity on a low income and with a low credit rating.

In fact, we would generally advise against homeowners releasing equity when they have a very high income. This is because they could use their current income to fund their retirement, and this would prevent them from getting into debt.

That being said, anyone is welcome to release equity, so if you are interested in the scheme and your current income is high, please do not be deterred from contacting us for a free consultation about equity release.

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Contact Equity Release Warehouse About Releasing Equity in 2023

Call us on 0330 058 1579 to enquire about taking out equity in 2023. Alternatively, we can get in touch with you first if you leave your contact details here.

We urge you to reach out to us as soon as you can, as the sooner you do this, the sooner you could access an equity loan that could change the course of your retirement forever.

If you are quick enough, you could become an official equity release consumer in 2022. It takes most homeowners around 8 weeks to receive their loan from the moment they seek advice.

Please keep in mind that there are fees involved with releasing equity; you will have to pay for various fees starting from when you make your application.

These fees cover things like legal advice, equity release advice, administration, and property valuation. Generally, they should not exceed £3000, and you can keep the amount low by selecting affordable advisers.

Don’t worry if you currently cannot afford this, as some equity release providers are willing to allow you to deduct the fees from your loan amount, so you can pay them back when you get your loan. If this is something you are concerned about, let us know, and we will explain this in more detail.

It is also wise to set aside some time for independent research, so make sure you include this in the time it will take for you to get your hands on your loan.

The reason we strongly recommend independent research is that equity release affects everyone differently, so you need to consider how it would personally affect you and your family.

Pay particular attention to how equity release could impact your benefits entitlement and the inheritance that you can pass on to your family.

As part of this independent research, shop around to find a professional equity release adviser who can help you with your decision.

We advise speaking to one of our equity release specialists as they will be open and honest about the scheme; they will happily discuss both the positives and negatives of equity release, so you do not have to worry about being pressured into enrolling onto an equity release plan.

If you get to the end of your appointment and you realise equity release is definitely not for you, there will be no hard feelings.

We know that not everyone would benefit from this scheme, so we are happy to offer suggestions for alternatives to equity release.

Some examples of alternatives your adviser may suggest are: downsizing, borrowing from loved ones, remortgaging your home, learning budgeting techniques, taking out traditional loans, claiming benefits, and accessing government grants.

Again, there are advantages and disadvantages of each of these schemes, so you will have to weigh these up to determine which option is right for you.

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References

[1] Discover 2022’s Record-Breaking Equity Release Market Statistics

[2] Q2 2021 equity release market statistics https://www.equityreleasecouncil.com/news/q2-2021-equity-release-market-statistics/

[3] Ibid.

[4] Equity Release Statistics UK 2022

[5] Demand for equity release doubles across many UK regions https://www.londoncitymortgages.co.uk/blog/demand-for-equity-release-doubles-across-many-uk-regions/

[6] How much equity can I release from my home? https://www.over50choices.co.uk/community/ashleys-blog/details/id/7941/how-much-equity-can-i-release-from-my-home

[7] Average equity release amount revealed https://www.bowerhomefinance.co.uk/equity-release-articles/average-equity-release-amount-revealed/

[8] What are the age limits for equity release?

[9] Ibid.

[10] What is a home reversion plan? https://www.telegraph.co.uk/financial-services/retirement-solutions/equity-release-service/home-reversion-plan/

[11] Ibid

[12] Younger equity release borrowers expected but warning raised over interest roll up https://www.mortgagesolutions.co.uk/news/2020/01/07/younger-equity-release-borrowers-expected-but-warning-raised-over-interest-roll-up/#:~:text=The%20average%20age%20of%20new,Equity%20Release%20Council’s%20autumn%20report.

[13] https://sovereignboss.co.uk/equity-release-statistics/

[14] January Is The Most Popular Time To Think About Equity Release https://www.over50smoney.com/Equity+Release/Lifetime+Mortgages/266__January+Is+The+Most+Popular+Time+To+Think+About+Equity+Release

[15] https://www.equityreleasecouncil.com/news/q2-2021-equity-release-market-statistics/

[16] Ibid

[17] https://www.equityreleasecouncil.com/news/q2-2021-equity-release-market-statistics/

[18] Ibid

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