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5.8m plan to use their home to help fund retirement

22/04/2021
RETIREMENT
  • Consumers increasingly expect financial advisers to consider property as part of retirement planning
  • Consumers would be most likely to consider equity release if they needed to make home improvements for medical/ mobility reasons

Research from savings and retirement specialist LV= highlights how consumers increasingly view their property as an important part of retirement planning.

 

The LV= Wealth and Wellbeing Monitor* - a quarterly survey of 4,000+ UK consumers – reveals:

  • 11% (5.8m) UK adults are planning to use the value of their home to help fund retirement
  • Half (50%) of consumers aged 55-74 would expect any property they own to be taken into consideration by their adviser when planning their retirement finances.

If you were to get financial advice for retirement which of the following would you expect your financial adviser to take into consideration when planning your retirement?
  55 to 74 year olds

Any savings and investments that you have

65%

Any personal pension(s) or employee pension(s) that you have

62%

Your state pension

 63%
Any property that you own 50%
Your partner's assets 32%
Other 6%
Don't know 24%
 Base: Those who use or are open to using a financial adviser

 

The survey asked UK homeowners in what circumstances, if any, they would consider getting a lifetime mortgage. We described a lifetime mortgage (sometimes called equity release) as when someone chooses to unlock some of the capital tied up in their property without having to sell their home or downsize. Money could be received as a monthly income or a lump sum.

  • Nearly half of UK homeowners (45%) would consider using equity release/ a lifetime mortgage for at least one of a variety of reasons. These reasons include:
    • Paying for home improvements for medical/ mobility reasons (17%)
    • Paying for a care worker (16%)
    • Increasing retirement income (15%)
    • Home repairs (15%)
    • Helping children and grandchildren financially (12%)
Figures from the Equity Release Council show annual lending to new and existing customers totalled £3.89bn in 2020 – up from £945m in 2009.

“The equity release market has grown over the past decade as consumers understand that it is a mainstream retirement planning option for people who want to unlock the value in their home to enjoy the retirement they want.

“The growth in the market over the past 10 years has been driven by a combination of factors: house prices have risen strongly, interest rates on lifetime mortgages have fallen sharply and equity release products have become a lot more flexible. Modern plans now allow policyholders to make voluntary or partial repayments with no early repayment charge for helping to boost the popularity of the sector.

“Equity release used to be regarded as a product of last resort but as more people carry debt into retirement they understand the important role it can play in funding their lifestyle.

“I expect that the equity release market will grow strongly in the second half of the year as lockdown ends and life begins to return to normal. Retirees are likely to use equity release to pay for new experiences after lockdown and a year of missing out, while those people who have been forced to take early retirement because of redundancy will consider equity release to clear debts.”

Clive BoltonManaging Director of Savings and Retirement at LV=

Stephen Auckland, CEO at Age Partnership, said: 

“Over the past twelve months, most people have re-evaluated aspects of their lives, including their plans for how to finance their retirement years.

“The later life mortgage market has been incredibly resilient throughout this Covid period, but the demand for lifetime mortgage products is likely to grow even further in the next few years, as the full ramifications of repaying the costs of Covid are revealed. The good news for our customers is that the latest lifetime mortgage products have flexible repayment options, exceptionally low interest rates and can assist with both immediate and long-term requirements.

“While the requirement is there to access funds, it is essential customers seek out the advice of gold standard, regulated, equity release advisors.  They will carefully discuss and understand individual circumstances and will recommend a product that meets personal objectives. This is a lifetime decision and requires the highest standards of advice and empathy.”

LV= and equity release

LV= offers Lifetime Mortgage Lump Sum and Lifetime Mortgage Drawdown equity release plans.

In 2020 LV= expanded its presence in the equity release market with the launch of a new platform supporting its products and the launch of a new drawdown product – Lifetime Mortgage Drawdown+. Using the LV= Equity Release Portal, advisers can produce key facts illustrations, submit and track lifetime mortgage applications online enabling customers to release money from their homes.

LV= also agreed a partnership with Age Partnership to advise customers contacting them directly about taking out an equity release plan.

 

Notes

*LV= surveyed 4,000 nationally representative UK adults via an online omnibus conducted by Opinium in March 2021.

**UK population stats from ONS. Total UK adult population is 52.7m (aged 18+).