Are you planning on using your home to release some extra cash in retirement? You might be in for a shock. New figures reveal that older homeowners who are taking equity release from their properties are actually seeing their homes lose value. This could mean you get less money than you hoped for.
Many people approaching retirement use equity release to access money tied up in their homes. This can be a great way to boost your finances and enjoy your later years. But, recent data paints a worrying picture for those relying on this option.
The Value of Your Home Matters
The amount of money you can release from your home depends on its current market value. While the average UK house price has barely moved in the last year, the value of more expensive homes has actually fallen.
This means that if you are planning to use equity release, you might not be able to get as much money as you expected.
The Numbers Tell the Story
The average UK house price is now £281,224, a slight increase of 0.2% over the past year. However, homes commonly used for equity release have seen a much bigger drop in price.
The average equity release home is now worth £364,586, a decrease of 3.3% or £12,363 over the last 12 months. That’s a significant loss of money for anyone planning on accessing their home’s value.
The Regional Picture
The situation varies across the UK. London has seen the biggest fall in prices for equity release homes, with a 9.9% drop. The East of England is not far behind, with an 8.3% decrease, and the South East has also seen a 4.1% drop in values.
However, there are some bright spots. The East Midlands has seen a 5.4% increase in the value of equity release homes, and Scotland, Yorkshire & Humber, the North East, and the North West also saw some modest gains.
What This Means for You
If you are thinking about using equity release, it is essential to understand how the housing market is performing in your area. Speak to a financial advisor to get expert advice on the best options for your situation.
Even if you are not planning to use equity release right now, it’s worth keeping an eye on property values. You might need to adjust your retirement plans based on how your home value changes over time.