New figures published by the Equity Release Council have revealed that a record amount of housing wealth has been unlocked by the over 55s using drawdown lifetime mortgages.
The figures for the final quarter of 2015 have pushed equity release lending to a new high of £1.61bn.
Lending via drawdown mortgage products was a total of £271m between October and December 2015, the largest quarterly total since this type of lifetime mortgage first emerged in 2004.
According to the Equity Release Council, seven in ten new plans agreed in Q4 2015 were drawdown, up from 63% in the third quarter of last year.
More people are choosing to withdraw their housing wealth in stages to boost their retirement income as and when they need it.
Drawdown lending for the whole of 2015 was also the highest on record at £961m.
It pushed total equity release lending activity by Equity Release Council members to £1.61bn. This is up by 16% from £1.38bn in 2014.
Last year saw more than 22,500 new equity release plans agreed for the first time since 2008.
Commenting on the figures, Alex Edmans, Head of Retirement at Saga, said:
“The increase in people using drawdown lifetime mortgages is really positive. People seem to be growing more confident in this sector as they recognise that they can use the money tied up in their home to help them financially plan for later life.
“These latest figures suggest that people like being able to unlock cash from their home as and when they need it.
“This can be a smart move financially as people only have to pay interest on the funds they release, but they know that they can unlock more cash at a later date if they need to.
“However, equity release is not right for everyone.
“We always recommend getting thorough advice before taking out a plan, as well as speaking to family and friends so they know what you are thinking of doing.”
Here at Informed Choice we absolutely believe that advice is essential before taking out an equity release plan, as well as considering how it works as part of your overall financial planning in later life.
