With research showing a surge in the number of over 55s taking equity release from their homes, financially, it may make more sense for the 55+ age group to rent rather than withdraw equity from their homes, suggests an industry commentator.
Figures from the industry body for the equity release sector the Equity Release Council (ERC) revealed that almost £1bn was withdrawn by over-55s through equity release in the first quarter of this year. This is an increase of 8% year-on-year.
The ERC reported that in the first quarter of the year:
- 20,400 over 55s borrowed against their homes;
- the average customer took out a lump sum of £97,763;
- uses of for the cash included funding home extensions and helping grandchildren get on the property ladder.
A spokesman from Girlings Retirement Rentals, however, points out that while equity release may be suitable for some people, there are alternatives such as renting or downsizing which could make people financially better off: “We have seen a year on year increase in the number of people choosing to sell their family home to downsize and rent, instead of buying. One of the main benefits is to have access to all their capital without paying interest, like many people have to do when taking out equity mortgages.” He also said that renting enables people to downsize to a more manageable sized property, release capital, save on bills and enjoy additional benefits such as access to a ready-made community and services they may need when they are older.
LandlordToday cites a recent survey from Retirement Villages that highlighted that over half - 55% - of those aged 55+ said they would consider renting a home while 48% would rent with a friend.