Intrigued to know where in the UK releases the most equity from their home? Many people are turning to equity release to facilitate their retirement plans. There are several factors that can influence this, from age ranges to the value of the homes in certain areas.
Here’s what you need to know.
What is an equity release?
Equity release essentially unlocks the value of your home, allowing you to retrieve cash without paying tax. The amount drawn can be provided in a lump sum or through regular payments.
It's about freeing up wealth that’s tied into an asset, such as your home. However you still get to live there.
There are two ways to go about equity release:
- Lifetime mortgage – This is where you take out a mortgage secured on your property while keeping ownership of it (assuming it’s your main residence). You could section off some of the value of the property and use it as an inheritance for your loved ones. You can make repayments or let the interest build. This amount and any interest will be paid back through selling the property when the last borrower passes away or moves into full-time care.
- Home reversion – This involves selling part or all of your home to a home reversion provider. You’ll then get a lump sum or ongoing payments. The deal is that you can live in the property until you pass away, however you need to make sure it’s insured and well-maintained. A percentage of your property can be used as inheritance or it can be sold. When the last borrower passes away or moves into full-time care, the property can be sold and the amount can be shared depending on the portions of ownership that remain.
Where is the most popular place?
The South East of England has the highest rate of equity release, according to a study conducted by equity release experts Key Advice. Statistics show that those living in this area released over £500 million in 2023 with over 6,000 plans in place, with the South West closely following.
Meanwhile, the lowest in the report was Northern Ireland at £15 million, and the North East at £44 million. Certain socio-economic and demographic factors will dictate these regional differences. For example, the demographic analysis indicated that 72 was the average age of equity release customers in 2023. Typically, those aged 55 or over should look into the options available to them when it comes to property to assess the best options out there.
What is the money being used for?
Key’s research found almost ¾ of the money was used for mortgages and debt repayments. Meanwhile, 12% went to remortgaging existing equity release plans and 44% of people used some of the cash to fund home improvements to their property, mostly to improve their quality of life in retirement.
How can you get an equity release?
Aside from being a homeowner, other factors that dictate whether you are eligible for an equity release include:
- Age – You will need to be within a set age range to qualify
- Property value – Your home will need to be above a set value
Depending on which equity release provider you go with, these details may vary.
