Thousands of active older people are enjoying everything from dream holidays to home extensions by unlocking cash from their homes as the equity release market takes off.
Thousands of active older people are enjoying everything from dream holidays to home extensions by unlocking cash from their homes as the equity release market takes off.
New figures from SHIP (Safe Home Income Plans), which represents the major equity release providers, reveal that the market has more than doubled in just one year.
And Norwich Union, the largest provider of mortgage-based equity release products, believes the trend is set to continue.
With more and more people remaining fit and active well into their retirement, they are looking for ways of releasing cash so they can afford to enjoy their leisure time.
The SHIP figures show that sales of equity products have seen huge growth, going up by 118% from Ł240.1 million in 1999 to Ł524.1 million in 2000.
People use the cash they release from their property for all kinds of things - to travel, improve their homes, buy new cars, or to invest so they have more money to spend day to day.
Daren Carter, Norwich Union's head of marketing for equity release, said:
"Equity release used to be viewed as a last resort, but these new figures prove that more and more people are becoming aware of the benefits it can bring and are using it as part of their broader financial planning.
"As well as releasing the money to enjoy it, equity release can be used to pre-fund long term care needs, or as part of inheritance tax planning.
"And many people are realising that their children are successful and do not need or rely on an inheritance, so they are becoming more relaxed about using their money themselves."
The growth in the equity release market has been driven by mortgage-based products, which are now more popular than home reversion plans. Sales of mortgage products soared by 251% from 1999 to 2000.
"We have driven this market growth through product innovation, and we believe there is still huge scope for expansion," said Daren Carter.
Media contact - Louise Zucchi
Norwich Union Press Office, 08703 666860
Notes to Editors:
- Norwich Union offers two options for people wanting to release cash from their home. The Flexible Cash Release Plan releases a cash lump sum and the Flexible Income Release Plan enables customers to receive a regular income - or the option to take up to 25% of the money released as a cash lump sum as well as a regular income. Loans are secured by a legal charge on their property.
There is nothing to repay during the customers' lifetime unless the house is sold or they need to go into long term care.
The plans should be seen as a lifetime commitment. Substantial early repayment fees may be payable if the loan is repaid for a reason other than death or long term care needs.
Full terms and conditions or a personalised illustration are available on request.
The income under a Flexible Income Release Plan is provided by a Norwich Union Immediate Life Annuity. The annuity has no cash value at any time. The income received under a FIRP is taxable as savings income.
Entitlement to state / tax benefits may be affected by taking out an equity release plan.
Norwich Union only advises on its own products.
CHECK THAT THIS MORTGAGE WILL MEET YOUR NEEDS IF YOU WANT TO MOVE OR SELL YOUR HOME OR WANT YOUR FAMILY TO INHERIT IT. IF YOU ARE IN DOUBT SEEK INDEPENDENT ADVICE.
- CGU and Norwich Union merged on 30 May 2000 to create CGNU plc - the world's 6th largest insurer, the UK's largest insurance group and one of the top-five life insurers in Europe with substantial positions in other markets around the world.
CGNU's principal business activities are long-term savings, general insurance and asset management with worldwide premium income and retail investment sales of Ł26 billion and assets under management of more than Ł200 billion.
The combined life and pensions, general insurance and retail fund businesses in the UK operate under the Norwich Union brand, while the institutional business operates under the Morley Fund Management brand.