Unlocking Retirement Income

Scotland's over-55s gain over 15 months of retirement income by unlocking their housing wealth.

Older homeowners in Scotland are using equity release to give them a financial boost worth more than 15 months of retirement income, according to the latest Equity Release Market Report from the Equity Release Council. 

The Autumn 2014 edition shows new equity release customers in the region are unlocking an initial £36,311 on average from the value of their homes: either as a lump sum or the first instalment of a plan allowing regular drawdowns to top up their retirement income.
 
In comparison, data from the Office of National Statistics shows the average retiree couple in the region has an income of £27,664 after tax from benefits, occupational and personal pensions, investments and earnings. The average net tax income for single pensioners in Scotland is £13,468.
 
Taking out an equity release plan is therefore giving retired homeowners in Scotland the equivalent of nearly 1 year and 4 months of retirement income to boost their finances. For single pensioners, the boost is even greater: equivalent to more than 2 years and 8 months' worth of income.
 
The Council's Autumn 2014 market report shows the average property value among new equity release customers in Scotland was £170,611 in the first half of 2014 (31% below the £248,612 average for customers nationwide). The initial equity withdrawal by Scotland's over-55s therefore amounts to more than a fifth (21%) of the value of their homes.
 
Equity release allows homeowners aged 55 and over to release money from their property as a lump sum or regular installments which do not have to be repaid until they pass away or move into permanent care.
 
Customers taking out plans from a member of The Council retain the right to remain in their homes for life and enjoy a 'no negative equity guarantee' which means their estate will never owe more that the value of their property.
 
As well as giving homeowners more equity to draw on, the long-term trend of rising house prices also helps to preserve their remaining equity once the loan and interest is repaid. A number of products in the market offer the option to ring-fence a minimum amount to leave behind to family and others as an inheritance.
 
Popular uses for equity release include providing extra funds to top up customers' pension income; paying for home improvements and care adaptations; clearing existing debts; supporting family members financially, i.e. with money towards a deposit to buy their own homes  and funding holidays and other recreational activities.
 
The Council's market report shows the average new equity customer across the country during the first half of 2014 was approaching their 71st birthday. The industry saw over 10,000 new customers across the UK during the same period, two thirds of which (66%) were married or cohabiting couples, up from 61% in 2013.
 
Nigel Waterson, Chairman of the Equity Release Council said:

"Older homeowners in Scotland are finding equity release can provide a valuable means of maintaining a good standard of living in retirement. Property wealth stands out among the most valuable assets available to UK homeowners, and can give them new options to achieve financial security in later life.
 
"Saving enough to enjoy a good quality of life has become increasingly hard as living costs have taken their toll. The option to unlock housing wealth can offer a welcome financial boost, while still leaving significant sums for other uses, such as leaving behind an inheritance to family members.
 
"Opting for equity release is a decision to consider carefully, with three levels of protection – professional financial advice, legal guidance and product safeguards, to ensure that it is suitable for each customer's individual needs. The surge of activity across the industry shows that for a growing number of people, the numbers add up to a better quality of retirement and provide an answer to many people's financial challenges in retirement."