STRICTER mortgage rules could be creating difficulties for homeowners looking to remortgage later in life, leading to a boom in equity release.
Equity release usually involves either a lifetime mortgage – a mortgage that does not need to be repaid until the borrower dies – or selling a share in your home in a deal that still allows you to spend the rest of your life there.
The number of new equity release customers aged between 55 and 64 jumped by 32 per cent in the second half of 2014, according to figures released today by the Equity Release Council (ERC).
The bump in homeowners looking to equity release follows the implementation of the Mortgage Market Review (MMR) in April, which put stricter rules on mortgage lending. Prior to MMR implementation, the proportion of customers aged 55-64 had been in decline.
“Equity release is helping people respond to a host of financial challenges at various points in later life, or simply enhance their standard of living so they can enjoy a more comfortable retirement,” said Nigel Waterson, chairman of the ERC.
“Part of the appeal lies in the option to cover off large one-off expenses. Paying off the last of an existing mortgage is often one of the biggest financial deadlines people have to face beyond the age of 55. The flexibility of equity release enables them to wipe the slate clean while also using their housing wealth to meet a range of other needs.”