The amount of equity released from residential property as a financial solution in retirement has increased by 25 per cent in the past year to £1.4bn, but 40 per cent of customers are using the capital to pay off debts, including mortgages.
Despite faltering house prices in the UK, the number of people drawing money from their properties rose by 9 per cent in 2007, a survey by Key Retirement Solutions, a specialist adviser, has found. Many use the capital for home improvements, one in three go on holiday, and 5 per cent fund medical care.
Meanwhile, the average age of equity release customers is now 68, down from 69 in 2006. "This fall confirms our suspicions that an increasing number of retirees do not have sufficient funds to live comfortably in retirement," said Dean Mirfin, business development director for Key. "More and more are turning to the assets tied up in their homes to supplement their income."
Northern Ireland saw the biggest leap in equity-release customers, up by 208 per cent in 2007, while the value of plans taken out increased by 305 per cent over the 12 months to a total of £21.1m. Unsurprisingly, those in London (£218.5m) and the South-east (£343.9m) released the biggest sums over the year, followed by the South-west (£190.6m). However, at £136m and £91m respectively, the North-west and the West Midlands saw a drop in the number of equity-release plans taken out.Reuse content