Is Now the Right Time to Consider Equity Release?

The UK’s real estate market has bounced back from its COVID-19 crash at a pace none could have predicted. Fuelled by the temporary stamp duty holiday and the collective desire of millions to upgrade to more spacious rural properties, average house prices recently hit a record high of £238,831.

As a result, many people are finding themselves living in homes that are worth considerably more than at the time they purchased them. Consequently, equity release is becoming an increasingly attractive option among homeowners within the 55+ age bracket.

According to the latest figures from the Equity Release Council, total equity release activity during Q1 this year was up 7% from the same period in 2020. Collectively, homeowners released equity totalling £1.4 billion during the first three months of the year. But does this mean that now is the right time to release equity?

The impact of rising house prices

Eligibility for equity release is based on two things:

• The market value of your home
• How much of your mortgage have you repaid?

Consequently, homeowners with properties that have increased significantly in value could find themselves able to borrow more than would have previously been possible. This could therefore open the door to a wide variety of cost-effective borrowing options, which could be used for anything from home improvements to taking the holiday of a lifetime.

Is now a good time to consider an equity release?

Understandably, the option of releasing equity at an affordable price is an attractive option for many homeowners who lack extensive reserves of on-hand cash. But does the current economic climate make now the right time to consider equity release?

The answer depends entirely on the financial circumstances and long-term outlook of the applicant in question. The fact that average house prices are skyrocketing has no direct bearing on the affordability or otherwise of products like these for the average homeowner.

If you are in a comfortable financial position and can genuinely afford an equity release, then yes, now could be a great time to take action. At the same time, anyone considering equity release also needs to factor in the potential for property values to decrease over the coming years and decades.

Understanding the options available

Reaching a decision without the input of an experienced broker is inadvisable, as there may be significantly better deals on the market than those available from high-street banks.

Whether you are ready to go ahead with an equity release application or simply want to discuss your suitability in more detail, we can help. UK Property Finance offers 100% independent and obligation-free advice on all aspects of equity release, along with a full market comparison service to ensure our clients get the best possible deal.