Many retired homeowners are living in property that could make them substantial sums of money if sold. New figures out today from Retirement Solutions show that the over-65s are sitting on property with £757 billion of unrealised equity. Despite gloomy predictions in the housing market, the amount of equity per property has increased by almost £3000 over the last couple of years as the market has stabilised in many areas following the falls that came as a result of the credit crunch.
This has helped fuel the equity release market. Retirement Solutions, who carried out the research, is an equity release firm. Group Director Dean Mirfin said that ‘whatever happens in the housing market over-65s own considerable property wealth which represents a massive investment success as they no longer have mortgages on houses they may have bought more than 25 years ago’.
Making Decisions
Elderly homeowners who have equity in their property could choose to look for an equity release deal so that they have some liquid cash to enjoy in their retirement. Others may feel that they would rather keep all the value of their homes in order to pass the asset on to their children and grandchildren when they die. Which option is likely to be the best one for pensioner homeowners may depend on where they live. In London and the South-East, pensioners own around a third of property equity. They have seen gains of nearly £16,000 on average in the value of their properties. At the other end of the scale, those in the East Midlands have seen the value of their properties fall by an average of £700.
Homeowners with significant and growing equity may feel that they can afford to take some of it out of the property now without risking their ability to pass on an inheritance. Equity release can also sometimes be used to pay for care while avoiding the need to sell a much-loved family home. If you have elderly relatives who are staying in their home and using equity release to pay for in-home care, it is important that you make sure they keep up with the financial and practical realities of running a home as they get older. Make sure that they are able to budget for bills, including landlord insurance as well as utility bills and manage basic maintenance and cleaning.
In an often uncertain housing market, the over-65s are able to benefit from having paid off their mortgages. However they choose to use that asset, it is one that can help give them (and often their families) a little peace of mind in an uncertain world.