Equity release customers are saving approximately £70,000 compared to five years ago as competition continues to drive down prices, data has revealed.
The saving would be made on interest payments by customers taking out the average amount of £70,625, according to the latest calculations made by over-55s finance specialist Key Retirement.
Total property wealth released during the first half of 2017 climbed to £1.246bn - 50 per cent more than during the whole of 2012.
The typical customer - a couple aged 71 with property value £314,612 and a loan of £70,625 - would have repaid £223,109 over 20 years at the 2012 rate, compared with £152,954 at today’s rate – a saving of £70,155 in total.
|COST OVER FIVE YEARS||COST OVER 10 YEARS||COST OVER 15 YEARS||COST OVER 20 YEARS|
|2012 AER RATE OF 5.92%||£94,156||£125,527||£167,351||£223,109|
|2017 AER RATE OF 3.94%||£85,676||£103,935||£126,084||£152,954|
Key’s data reflects the whole market, including both members and non-members of the Equity Release Council.
Equity release has become popular with homeowners looking to unlock cash from their properties in later life.
It can be used for a variety of purposes, including paying off interest-only mortgages, helping children save up for a deposit on a property and boosting retirement income levels.
Dean Mirfin, technical director at Key Retirement, said: “Retired homeowners are benefiting from record growth in the equity release market, as increased competition drives down the cost of borrowing.
“The example shows the fall in rates over the past five years has been significant and is helping more customers support their family, as well as themselves, as equity release makes a major contribution to the retirement standard of living.”