Average drawdown for equity release customers is £125,000

Equity release is one option to consider if you're looking for ways to boost your income in retirement.

Homeowners who opted for equity release last year withdrew the equivalent of more than seven years of retirement income from their home, according to the Equity Release Council's Spring 2022 market report.

With UK property wealth reaching a record £5.2tn by the end of the year, equity release customers took £125,000 on average as a single lump sum or via incremental 'drawdowns'.

Lifetime mortgages are the most common type of equity release product. With a lifetime mortgage you borrow money secured against your home, and this is usually repaid from the sale of your home when you die or move permanently into residential care.

Lifetime mortgages account for around a quarter of new loans taken out by customers aged 55+ and three quarters of those taken out by customers aged 65+ since the end of 2019.

Product choice has more than trebled in the last three years alone, and a growing number of equity release products offer the option to make voluntary penalty-free partial repayments and to repay the loan in full, with no early repayment charge, in the event of downsizing, the Equity Release Council says.

The trade body's analysis of wider property market activity shows the total value of UK housing reached £6.7tn at the end of 2021, rising by £1.6bn each day on average or £1m every minute. When mortgage debt is discounted, it leaves the nation with £5.2tn of property wealth, equivalent to £211,000 per household.

"After years of putting money away in bricks and mortar, older homeowners are turning the tables and taking funds from their homes in order to boost their retirement income, meet one-off costs and gift a living inheritance to family," said David Burrowes, chair of the Equity Release Council.

"With £1m added to the value of UK housing every minute last year, the options afforded by property wealth will feature in many people's thoughts as they make financial plans for the future."

Burrowes added that with growing cost-of-living pressures, the need for rigorous advice is greater than ever "so that decisions to release equity continue to provide long-term satisfaction as well as short-term relief".

Equity release does come with certain risks and it's essential to consider it very carefully and get specialist financial and legal advice before making any decisions.

Recent changes to the rules mean that all customers who are considering an equity release product are required to have at least one face-to-face meeting in person with a solicitor before taking out a plan that meets Equity Release Council standards.

This marks a return to pre-pandemic requirements and follows a temporary amendment introduced in April 2020 which meant that cases could still progress where appropriate and customers could access funds despite lockdowns and social distancing measures.

"While restrictions have ebbed and flowed during the pandemic, we are hopeful the worst is now behind us," Burrowes said. "The time is right to return to the default of in-person legal advice while learning lessons about how technology can best support the overall process and customer experience."