The huge increase in property prices over the past few decades means that many homeowners are sitting on property wealth. And many older homeowners are planning to tap this wealth to supplement their income in retirement, according to new research from Key.
In a survey of 1,000 people who expect to finish full-time work in 2020, the over-55s specialist found that almost one in three (30%) plan to use their property wealth to help boost their retirement income, with nearly half (46%) looking downsize to a smaller property and 23% considering equity release or remortgaging.
In fact, just two in five (40%) of those surveyed said they are happy with their expected retirement income and don't need to consider their property wealth.
The biggest reason given for not using property wealth in retirement is the desire to leave an inheritance to family -- 16% of homeowners want to leave their house to family members. However, 15% are worried about borrowing money and a further 15% do not want to move.
Other respondents said they were concerned about the reputation of equity release (8%) or were worried about making a mistake (6%).
Across the country, over-65s have more than £1tn worth of unmortgaged housing equity.
People who are planning their retirement should talk to a financial adviser about the options for accessing their property wealth, said Key chief executive Will Hale.
"With people retiring this year owning homes worth an average of £388,900 and total property wealth of £142bn there clearly is a lot of wealth that could be used in retirement," he pointed out.
"Many will not need to use their home as part of retirement planning, but it is worrying if people are not taking property wealth into consideration due to a lack of awareness of the options available to them or as a result of myths or misconceptions about products."
Hale added: "Our research shows many are worried about borrowing money or moving to a new house while others are concerned about making mistakes. These customers could benefit from information and advice when assessing their options for using property wealth and, while equity release is not right for everybody, modern lifetime mortgages with low rates and flexible features such as the ability to service interest or repay capital mean that they offer potential solutions for a wider range of customers than ever before."