Homeowners cash in on properties to fund home improvements

Article date: 21 January 2002

Home improvements top the shopping list for thousands of olderpeople who release money from their properties when they reachretirement, according to figures released by Norwich Union.

Research by the company, which has launched a new equity releaseproduct allowing people to get cash out of their homes, also showsthat nearly half of customers opt for new cars or holidays.

And with the equity release marketing increasing more thantenfold over five years1 and continuing to boom, thesigns are that more and more people are taking advantage of theopportunity to turn their financial wish lists into reality.

But the money doesn’t just go on luxuries – aquarter of people put some aside for a rainy day, or invest forfuture needs such as long term care.

Norwich Union equity release plans work by unlocking aproportion of the value of a property from a property by way of amortgage. The customer retains ownership of their home, and hasnothing to repay during their lifetime unless the house is sold orthey need to go into long term care.

Norwich Union asked more than 2500 of its equity releasecustomers2 how they spent the money. The resultswere3:

  • Home improvements – 54%
  • Investing for future needs – 25%
  • Holidays – 23%
  • New cars – 22%
  • Living expenses – 16%
  • Pay off debts – 10%
  • Gifts – 7%

Norwich Union’s latest equity release product, the IndexLinked Cash Release Plan, has a minimum eligibility age of 55– the lowest minimum age limit within the market – sopeople don’t have to wait until retirement to unlock thecapital from their homes.

The loan-to-value ratios are higher than for previous products,so more cash can be freed up. This has been made possible by theintroduction of a new interest rate structure. The interest rate islinked to the Retail Price Index, and includes the added protectionof a maximum rate, currently 10.14 per cent.

Norwich Union has also relaunched its existing fixed rateFlexible Cash Release Plan with an improved benefits package.

Daren Carter, head of equity release marketing for NorwichUnion, said: “Equity release is becoming more and morepopular as people understand the benefits it can offer.

"They are realising that it is not a 'last resort' way ofraising money, but a valid and effective way of making the most ofan asset they have worked for most of their lives to buy –their home.

“Equity release is a key part of financial planning forretirement, and we are now offering alternative types of product sopeople have a choice according to their needs andpreferences.”

The Index Linked Cash Release Plan has a minimum interest rateof 4.89 per cent and a maximum interest rate of 10.14 per cent. Theactual rate charged will depend on the annual change in the retailprices index.

The Flexible Cash Release Plan has a fixed interest rate of 7.79per cent.


Media contact
David Ross, Norwich Union Press Office, 08703 66 68 65

1Source Safe Home Income Plans (SHIP) 2001
2Norwich Union surveyed 2565 customers in 2001
3Many people spend the money on more than one of thethings listed, so the percentages given total more than 100

Notes to Editors

  • Full written terms and conditions are available on request.Different terms apply for the Flexible Cash Release Plan and theIndex Linked Cash Release Plan. Refer to the 'At A Glance' guidefor terms and conditions (attached).
  • Norwich Union is the UK’s largest insurer. It is theUK’s largest provider of life, pensions and investmentproducts and one of the leading IFA providers. IFAs provide around75% of the company’s long-term savings business.
  • Norwich Union has strategic alliances with over 20 buildingsocieties and other leading UK brand names including TescoPersonal Finance and The Royal Bank of Scotland Group.
  • Norwich Union’s news releases are available on thisinternet site
  • A selection of images is available from the CGNU Newscast siteat www.newscast.co.uk
  • An ISDN facility is available for studio quality interviews.Call the press office on 08703 66 68 68

For all life & pensions media enquiries 08703 66 68 73
For all other media enquiries 08703 66 68 68

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