SCOTLAND’s army of retired homeowners are sitting on property worth a staggering £42 billion as they see property wealth rising to record levels.
Homeowners over the age of 65 are reaping the benefits of paying off their mortgages and have seen the average change in their property value grow between May and August by more than £12,000.
That figure represents a combined Scotland-wide total of £3.4bn.
Only London and East Anglia recorded higher growth figures across the whole of the UK, with rises of £17,000 and £12,800 respectively.
The estimated property equity in homes owned outright by over-65s in Scotland is now more than £42bn.
Across the country 282,000
homes are owned outright by people over 65.
Property wealth for the age group throughout the UK hit a new record of £1.101 trillion, a jump of £47bn, according to the Key Retirement Pensioner Property Equity Index.
The surge in property wealth is linked to the continuing strength of the housing market in Scotland – and is underlining the value of equity release to boost the standards of living of homeowners in retirement.
Equity release refers to products which allow you to access the cash tied up in your home if you are over the age of 55. It can be taken as a lump sum, in several smaller amounts, or a combination of both.
Peter Boyd, managing director of Boyd Legal, one of Scotland’s leading equity release legal advice specialists, said the record figures combine with the fact that equity release is the fastest growing segment of the mortgage market in terms of customer numbers.
“These figures play out in clear terms the value of home ownership in Scotland,” he said.
“Increasingly, we are seeing a crucial mindset switch from people who have paid off their mortgages, a realisation that anyone who owns a home bought with a mortgage has effectively been ‘saving’ throughout their lives. It means that the house you live in is a potential source of income in older life because your mortgage has been invested in bricks and mortar – and that wealth can now be unlocked.
“Over the May-August period, Scots earned £3000 a month from their homes. That property wealth – which can be unlocked through equity release – can now be used to fund a range of measures to improve standards of living in later life, such as home improvements, holidays or as a vehicle to get children or grandchildren on to the property ladder.”
Increased competition in the equity release sector, which is driven by the surge in demand to open new equity release plans, has also helped to drive down the cost of borrowing.
According to Key Retirement, the cost of raising money through lifetime mortgages, which remains the most popular form of equity release, has dropped dramatically over the past five years.
Someone releasing the average amount of equity today of £70,625 could save as much as £75,000 in interest over 20 years.
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