Equity release cash used to help family members

According to Key Retirement Solutions, equity release is becoming an increasingly popular way for home-owning grandparents to support their families.

The equity release firm claims almost 19% more equity was released during the first quarter of 2010 than during the first quarter of 2009. Its market report for the quarter showed the amount of equity released from people’s homes totalled £216.9 million compared with £183.1 million during the 2009 period.

Although home and garden improvement was the most popular use for the money (58%), Key Retirement Solutions discovered that 35% of retired homeowners released the funds to help out family members, up from 19% during the prior-year period.

The average amount of cash released during the three-month period was £43,090 compared with £44,948 in 2009; however, the number of equity release plans sold grew 19% to 5,600 from 4,703. Significantly, drawdown plans, which allow customers to use the money as and when it is needed rather than as a lump sum represented 68% of sales compared with 57% during the first quarter of 2009.#

Dean Mirfin, business development director at Key Retirement Solutions, said: “The equity release market is healthier and delivering strong returns for retired homeowners as confidence increases, which in part has been helped by the gradual property market recovery. Despite falls in property values over the past couple of years many find that they can comfortably raise the amounts they need from the current wealth tied up in their homes.

“It is striking that pensioners are more confident about using their wealth to benefit others rather than having to use the money for themselves. The over-65s’ property wealth represents a massive investment success as many will have bought their homes more than 20 years ago.”