Why equity release is increasingly relevant for high net worth clients
Years of solid house price growth in the UK has left many individuals and couples with a very large sum of money locked in their homes. Equity release is, of course, one way of unlocking this accumulated wealth without the substantial disruption of leaving a much loved home.
However, equity release is often seen through a narrow lens of financial distress, an option of last resort where clients cannot make ends meet. In contrast, particularly in today’s low interest rate environment, IFAs should see equity release as a practical financial planning tool, even where a client is wealthy. Let’s take a look.
UK house prices have had a long period of solid growth over the past 20 years, allowing home owners to benefit from large rises in the valuations of their homes, meaning mortgage-free over 55s are potentially sitting on large amounts of equity tied up in their home.
The equity release market is growing rapidly
In turn, the amount of money lent through equity release plans is rising fast. With £1.06bn lent in 20131, the total amount released, based on previous growth, is on course to reach around £7-8bn by 2021.