YOUR HOME: A LATER LIFE CASHPOINTMonday 9 September 2013
• Three quarters of equity release customers choose a draw down service • On average, people take £25,000* as an initial lump sum • More than half of people use the money to improve or adapt their home • A fifth of people release money to give to family members
YOUR HOME: A LATER LIFE CASHPOINT
Research by The Saga Equity Release Advice Service shows that people are now using their houses as part of a sophisticated approach to funding later life.
Three quarters of people choosing equity release now opt for a drawdown product1, which enables them to release money as and when they need it and minimises interest payments. On average, people take £25,000 as an initial lump2, with 40% coming back later for more funds. But one in seven release money at least three times with subsequent advances averaging £6,000. If these customers had taken £43,000 initially, they would have been incurring interest on the full amount from day one, so have in fact saved around £2,673 over five years by using a drawdown service3.
For a fifth of over 50s the desire to stay in the family home is so strong that they would not consider moving. Many spend money on home improvements so they can stay in their home for as long as possible4. More than half of people say they use some of the initial drawdown to pay for major home improvements (59%). On average, people unlock £13,000 to modernise their homes or make it suitable for them in their old age, however using a drawdown service allows them to return for more money in case of any leaks or DIY disasters.
However, many are keen to use the money to treat themselves and their family. A third of people have released an average of £6,000 to cover the cost of a well-deserved holiday of a lifetime, while a fifth give an average of £28,000 to their family showing they truly are the generous generations as this money may help put their children or grandchildren on the property ladder. It may also help cover one-off events such as children’s weddings or grandchildren’s round the world trips that people may not have been able to plan for.
Roger Ramsden, chief executive, Saga Services commented: “People spend most of their life looking after their home, so it is good that in later life their home can work for them and give people a better quality of life or allow them to pass on wealth to their loved ones in their lifetime.
Using a drawdown service puts people in control of the money tied up in their home, the flexibility to release money as and when they need it is rather like going to a cash point and can be much cheaper than taking out a large loan at the outset."
The Saga Equity Release Advice Service can help those over 55 find the money they need to subsidise retirement or help their family get a good start in life. Releasing money through a drawdown product means people can unlock money tied up in their home and only pay interest on the amount they borrow at any one time.
Notes to Editors
• 1Data is based on Saga Equity Release customers
• 2Average drawdown excluding the amount people use to clear their mortgage
• 3 Based on a customer initially releasing £25,000 and taking another £6,000 a year for the next three years.
• 4Populus interviewed 10,862 Saga customers, all aged 50 and over, online between 20th and 27th February 2013. Populus is a member of the British Polling Council and abides by its rules.
Saga Equity Release Advice Service
The Saga Equity Release Advice Service is provided by Just Retirement Solutions Limited and the Saga Equity Release Plan is provided by Just Retirement Limited.
• Equity release could offer homeowners aged 55 or over a way to release tax-free cash from their home to spend on whatever they choose.
• Expert advice with no advice fee, which could save you hundreds of pounds
• A no-obligation assessment of equity release based on your individual circumstances
• A free check to see if you’re missing out on any State benefits
• Access to a range of equity release plans at specially negotiated rates
• Exclusive access to the Saga Equity Release Plan, provided by Just Retirement Limited
• For more information please visit www.saga.co.uk/money
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