Homeowners cash in on rise

PIC: ROB MCDOUGALL / NEWS'STOCK'HOUSE SALES'HOUSE HUNTING 'FOR SALE SIGNS'FOR SALE SIGN'HOUSE PURCHASE'HOMES'FIRST TIME BUYER
PIC: ROB MCDOUGALL / NEWS'STOCK'HOUSE SALES'HOUSE HUNTING 'FOR SALE SIGNS'FOR SALE SIGN'HOUSE PURCHASE'HOMES'FIRST TIME BUYER

Growth in the housing market is seeing more Borderers opting to release money tied up in their properties to ease their retirement.

The three months to the end of September saw £19million released in Scotland, according to analysis from over-55s specialist adviser Key Retirement Solutions. Of that, just over £422,000 came from eight properties in the Borders.

In the third quarter of this year, Scottish customers took out equity release plans worth an average of £45,337 – 10 per cent up on the same three months last year – fuelled by the property market surge, according to the group’s equity release market monitor.

They say the strong growth is being driven by increased awareness of equity release plans as a solution for retirement income planning issues. The majority (70 per cent) used some or all of the cash to help with regular bills or to establish an emergency fund. Around 31 per cent cleared off short and medium-term debts like loans or credit cards.

However, crucially, 26 per cent of customers needed the money to pay mortgage debts – underlining how equity release is growing as a solution for the interest-only crisis. Customers are also using the funds released to improve lifestyles in retirement – 48 per cent used some or all of the cash to pay for home or garden improvements, 31 per cent paid for a holiday and 19 per cent bought a new car.

Dean Mirfin, group director at Key Retirement Solutions, said the equity release market was already growing strongly before the housing market revival.

He revealed: “Across Scotland a total of £49,325,770 has been released so far this year, dwarfing last year’s figure of £30.6 million at the same stage.

In addition, the corresponding number of equity-release plans has rocketed from 801 in the first nine months of last year to 1,171 in 2013.

“The property market growth is helping customers realise that housing wealth can play a major role in retirement planning, both as a solution for problems such as interest-only and as a source of funds when other retirement income sources are under pressure. The market is on course for a record year with growth built on strong foundations due to its focus on advice and delivering solutions which suit changing lifestyles and reflect customer needs.”