NEW FIGURES show that home owners in Reading could release up to £200,000 in equity in their homes.
Research by UK Care Guide shows that there are new opportunities for home owners to release equity through their homes, as equity options diversify.
Figures show that the number of people taking up equity release plans dropped by 31% last year amid financial instability.
Despite this, it represented an increase compared to 2021, which the UK Care Guide considers a sign of stabilisation in the market overall.
They examined house price figures in Reading, where they found that the average house price is just over £334,500.
Equity release plans are based on a percentage of the value of the home, with plans for 20%, 40% and 60% available.
These translate to an average of £66,900, £133,800, and £200,700 respectively.
However house prices are rising in Reading, despite remaining below the national average, meaning that residents can borrow more against the value of their homes.
Home owners looking to support retirement plans and savings, fund home improvements, or pay off debts could increasingly turn to equity release plans.
The research shows that retirement plans are increasingly funded by equity release, as the borrowing potential for home owners over 55 has continued to increase due to changes in property values since 2022.
They predict also that this steady increase will continue, and posit that more tailored plans will be available to home owners to give them better flexibility in the future.
Equity release is an agreement between a home owner and a buyer (often a bank or reversion provider) where part or all of the house is secured against a loan or agreed to be sold.
In mortgage equity release, the owner is paid a loan which is secured against the property, and can either be paid back in instalments or paid off through the sale of the property after the owner has left the property.
In reversion, part or all of the home can be sold to a provider for either a lump sum or regular payments, while the occupier retains the right to live at the property.
Saq Hussain, founder of UK Care Guide, said: “We predict a steady increase in demand for equity release in Reading, especially given the changes in property prices.
“This enables residents to access larger sums and reflects broader financial prudence among those over 55.
“It’s important, however, that all potential options are considered, and that residents understand how equity release affects their overall financial health–whilst the money may seem attractive, there are a number of disadvantages to consider.
He added: “With equity release agreements allowing for up to 60% borrowing rates, there’s substantial potential for financial manoeuvring.
“Equity release, therefore, must be approached with clear, comprehensive advice tailored to individual circumstances, based on accurate market values.”
