There is hardly a day that goes by without significant coverage in the national press in relation to the UK property market, this is also true when talking about UK residential property mortgages which are humongous 1.3 Trillion pound market.
DevDosh Ltd believes that the situation with interest at the moment is great news for UK homebuyers with mortgage rates starting as low as 1%, as low as they have ever been, 245 billion pounds was borrowed in 2016 up 11% on the previous year.
There is a certain sector of property finance that is not as widely known as the rest and that is equity release mortgages, although this is still only a drop in the ocean at 2.2 billion pounds borrowed last year, this sector has seen growth at breakneck speed recently.
The big players in this market Legal & General, Santander and Nationwide have ambitions to grab a bigger piece of the pie from the supreme leader in the industry Aviva, as experts predict the market to grow to 20 billion in a very short space of time.
The factors driving this growth are ones of necessity as more and more of UK population struggle with financial worries with growing debt levels, rising living costs and the pressures of old age, many with the financial services arena see equity release as the light at the end of the tunnel.
Approximately £1.7tn — or up to £340,000 equity per home — is tied up in property owned by people over 65, much of it concentrated in the southeast of England.
A run of the mill equity release mortgage, taken out at age 65, might give 25 per cent of the value of the home upfront, with the principal and compounded interest only repayable on death through the sale of the house. The equity can also be released in an income drawdown format.
Before anybody considers equity release they must think long and hard, in the not so distant past of the 1980s DevDosh Ltd saw a similar situation with a surge of equity release loans, miss-selling was rife and many UK property owners found themselves in deep water with high-interest rates and negative equity.
Lessons do seem to have been learned by the industry as interest rates are considerably lower at 5.5%, but this is still high when considering normal mortgage rates.
It is not surprising that so many UK pensioners are struggling later in life as according to the World Economic Forum the UK has one of the largest pension gaps throughout the developed world. The shortfall is the amount of that is needed to keep pensioners on 70% of their income before retirement, this figure stands at 25 Trillion pounds, a big deciding factor behind the British government raising retirement age to 68 years of age.
Another driving force behind equity release is people paying their own care homes fees, with no cap on care costs for anyone with personal assets over 100,000 GBP.
Last but no means least is the need for UK property owners who took out interest only mortgages to bridge any shortfall when the mortgage is up.
In DevDosh Ltd opinion, what is also a big concern is pension freedoms as people are no longer required to buy annuities or income for life pensions, so as many have taken lump sums and spent the money and are left with an insufficient amount to fund their retirement.
If you are looking to bolster your pension fund and would like to see safe annual returns of 10% please visit DevDosh Ltd today.