Over-65s urged to consider equity release
According to its Pensioner Debt Index the average amount of unsecured debt owed by over-65s stood at £1,546 in December 2014 after rising by 16% year-on-year.
The average over-65 homeowner has £192,506 of equity in their property to potentially draw on, while nearly eight in 10 (79%) are completely mortgage free.
Nigel Waterson, chairman of the Equity Release Council, said: “Long-term house price growth has left many older homeowners sitting on a personal property fund that can transform their financial outlook in later life.
“Equity release should be considered across the board as one of a variety of options on the table, so people make the right decisions and use all their available assets to secure the most comfortable retirement possible.
“The arrival of the guidance guarantee on the back of the pension reforms means that 2015 will be the year when people begin to take greater stock of their available assets on the approach to retirement.
Of those with a mortgage two thirds (63%) have a capital and interest repayment deal while one in three (37%) has an interest-only mortgage.
Most equity release plans offer loan to values starting at 20%, meaning nearly £50,000 can be drawn out based on the average house price of £249,568 – twice the size of the average pension pot at retirement.
Currently the first course of action for over-65 homeowners who need extra money is to dip into their savings (67%), yet nearly one in 10 (9%) has no savings while almost one in five (17%) has less than £5,000.
Waterson added: “The concentration of housing wealth among older generations should be an enabler for greater lending beyond the age of 65 along with the confidence that repayment obligations can be met.
“In the last year, the equity release market has welcomed increasingly flexible products and we await the arrival of more providers in 2015 to help older consumers lead the lifestyles they have worked for throughout their lives.”