Property boomers make big money on equity release
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Your support makes all the difference.A record number of people cashed in on their profits from the housing boom during the three months to the end of September, as sales of equity release plans hit their highest ever quarterly total.
A record number of people cashed in on their profits from the housing boom during the three months to the end of September, as sales of equity release plans hit their highest ever quarterly total.
More than £338m was withdrawn from the value of people's homes during the third quarter of the year, an increase of more than 13 per cent on the same period last year. Over the past year, the amount drawn down through equity release plans is more than £1.08bn. Although this is slightly lower than the 2003 total of £1.1bn, the fall in business is believed to be mainly down to the uncertainty caused by new mortgage regulations that came into force this week. These will govern the way in which the main type of equity release plan, the lifetime mortgage, is sold.
The other main type of scheme - a home reversion plan - will remain unregulated for at least another year, while the Government changes the necessary legislation to bring it under the Financial Services Authority's remit.
Home reversion plans are those where you sell all or part of your house to a financial services provider, but remain in the house rent-free until you die. The industry's self-regulatory body, Safe Home Income Plans (SHIP), has provided a voluntary set of regulations to maintain standards until the FSA takes over.
Key Retirement Solutions, the specialist financial advisers, said the main growth in the equity release market has been in the Midlands and the North. In contrast, the number of equity withdrawals in the London market fell after a strong year in 2003. Colin Taylor, managing director of Key, said: "Releasing equity to fund retirement is becoming an increasingly acceptable option for many people. We believe equity release business will continue to rise to the end of 2004, and forecast that well over £1bn of plans will be arranged this year."
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