Often labelled as the generous generation, Q3 in 2018 saw a 20% rise in the number of homeowners over 55 releasing equity from their homes compared to that of the same time last year, recent research has shown*.
This rise, when used alongside our own data*2
, shows an increase in those using equity release to support family and friends.
So, why are so many using equity release to support those nearest?
In further research*3
, we found that 59% of the 950 over 55s surveyed are concerned the next generation will not be able to generate the same wealth as their own, with 73% of the same demographic believing there is an intergenerational divide in terms of financial wellbeing between themselves and their children.
Where is the pre-inheritance support going?
Providing financial support for future generations with a deposit for a new home in mind was by far and away the most significant reason given by 256 of the 371 over 55s questioned, with 69% keen to offer monetary aid for the purchase.
Helping to pay for a car and supporting the costs of a wedding were the next two most prominent reasons provided – 26% and 22% respectively – while 11% saw gifting as an avenue to help younger generations pay off debts.
So, why now?
Wanting to ensure future generations benefit from their inheritance was the most important reason given behind in-life gifting as opposed to leaving solely an inheritance - 49% - with the same number wanting to make sure their hard-earned wealth was not squandered.
22%, meanwhile, wanted to be specific about what their financial support is used for, although 20% of the same demographic were quite the opposite, and merely wanted to see their future generations enjoy the support.
How equity release could support in-life gifting
As was highlighted by our 2018 Q3 Market Monitor, a significantly increasing number of over 55s are releasing the cash currently locked in their home via equity release to support posterity*2
Equity release, unlike passing on an inheritance, has the potential to release tax-free cash from your home to spend as you wish.
Whether you join the 27% of those during Q3 who gifted to family or friends, futureproof your home, enjoy a holiday or pay off outstanding debts; the choice is yours.
However, equity release is not for everyone. And, at Key, we know that. Which is why, if it’s not right for you, we will tell you.
Remember, good advice is Key.
Things to consider
Our independent, specialist advisers search the whole market to find the right equity release plan for you. They’ll explain all the options available and that taking a plan reduces the value of your estate and may affect any means-tested benefits you’re eligible for.
You have to get specialist advice before releasing equity; it’s the only way to do it. The initial consultation is free with no obligation to proceed. If you decide to go ahead with an equity release plan, our advice fee, usually 1.99% of the amount released; subject to a minimum of £1,499, is payable only on completion.
With a lifetime mortgage – the most popular form of equity release – you’ll still own your home. As with any kind of mortgage, it’s a loan secured against your home. All equity release plans we recommend have a no negative equity guarantee, which means you’ll never owe more than the value of your home.
You should always think carefully before securing a loan against your home.
If you’re considering equity release we recommend that you read is it right for you?
* Equity Release Council data
Key’s Q3 Market Monitor report
Research conducted by independent researchers Consumer Intelligence among a sample of 950 homeowners - with children or grandchildren - aged 55+ between 2nd
July – 10th