Equity release calculators helping people withdraw money from their home

In this guest article, Tudor Lodge Consultants outline how equity release calculators are helping people withdraw money from their home.

Following 2021’s resurgence, the equity release market is continuing to grow. The latest study from the Equity Release Council (ERC) found that there was a further rise in the number of equity release consumers in Q1 2022, with over three million customers having received help with their retirement savings by 2021.

Equity release is a way of accessing the cash tied up in your property without having to move out. Increasingly, people are able to access an equity release calculator and see how much money they can take out of the equity in their home.

With equity release, you can either take a lump sum or smaller amounts as and when you need them, and there are no monthly repayments to make. The money you release is tax-free and can be used for anything you want – whether that’s supplementing your income, making home improvements or gifting to your family.

During the first quarter of 2022, 12,174 new plans were set up, a 21% increase from last year. 54% of people used drawdown lifetime mortgage to withdraw equity during this period, setting a new record.

In the first quarter, there was a 19% rise in withdrawals from property to £1.53 billion, according to the UK’s largest doorstep lender. The first quarter saw a striking 14% rise in total deposits compared with the same period last year (£1.34 billion). The average drawdown lifetime mortgage payment of £94,215 was 5% up on last year.

The average lump sum withdrawal rose 7% to £131,781 in the same period.

The number of people who are planning on releasing equity has been growing steadily in recent years. According to the ERC, however, the equity release market is now six times larger than it was in 2010.

David Burrowes, Chair of the Equity Release Council, commented: “The popularity of equity release so far this year is the natural result of modern products offering greater flexibility and a property market where growth has far outstripped inflation, alongside an ageing population.

“After two years where customer numbers have been subdued by the pandemic, realising gains from rising house prices can make a major difference to people’s quality of life.

“Not only are more people considering equity release, but they are doing so for many different reasons and helping old and young alike to fund everyday costs and major life events.

“Innovation has made equity release products more adaptable to customers’ changing circumstances. Our standards mean lifetime mortgages remain the most secure type of retirement home finance, with customers protected from interest rate rises, repossession and passing on debt due to negative equity.

“However, it remains vital that decisions are carefully considered through both a long-term and short-term lens, with family input wherever possible and with financial and legal advice in every instance.”