Article date: 2 April 2001
Thousands of active older people are enjoying everything fromdream holidays to home extensions by unlocking cash from theirhomes as the equity release market takes off.
New figures from SHIP (Safe Home Income Plans), which representsthe major equity release providers, reveal that the market has morethan doubled in just one year.
And Norwich Union, the largest provider of mortgage-based equityrelease products, believes the trend is set to continue.
With more and more people remaining fit and active well intotheir retirement, they are looking for ways of releasing cash sothey can afford to enjoy their leisure time.
The SHIP figures show that sales of equity products have seenhuge growth, going up by 118% from £240.1 million in 1999 to £524.1million in 2000.
People use the cash they release from their property for allkinds of things - to travel, improve their homes, buy new cars, orto invest so they have more money to spend day to day.
Daren Carter, Norwich Union's head of marketing for equityrelease, said:
"Equity release used to be viewed as a last resort, but thesenew figures prove that more and more people are becoming aware ofthe benefits it can bring and are using it as part of their broaderfinancial planning.
"As well as releasing the money to enjoy it, equity release canbe used to pre-fund long term care needs, or as part of inheritancetax planning.
"And many people are realising that their children aresuccessful and do not need or rely on an inheritance, so they arebecoming more relaxed about using their money themselves."
The growth in the equity release market has been driven bymortgage-based products, which are now more popular than homereversion plans. Sales of mortgage products soared by 251% from1999 to 2000.
"We have driven this market growth through product innovation,and we believe there is still huge scope for expansion," said DarenCarter.
Media contact - Louise Zucchi
Norwich Union Press Office, 08703 666860
Notes to Editors:
- Norwich Union offers two options for people wanting to releasecash from their home. The Flexible Cash Release Plan releases acash lump sum and the Flexible Income Release Plan enablescustomers to receive a regular income - or the option to take upto 25% of the money released as a cash lump sum as well as aregular income. Loans are secured by a legal charge on theirproperty.
There is nothing to repay during the customers' lifetime unlessthe house is sold or they need to go into long term care.
The plans should be seen as a lifetime commitment. Substantialearly repayment fees may be payable if the loan is repaid for areason other than death or long term care needs.
Full terms and conditions or a personalised illustration areavailable on request.
The income under a Flexible Income Release Plan is provided by aNorwich Union Immediate Life Annuity. The annuity has no cash valueat any time. The income received under a FIRP is taxable as savingsincome.
Entitlement to state / tax benefits may be affected by takingout an equity release plan.
Norwich Union only advises on its own products.
CHECK THAT THIS MORTGAGE WILL MEET YOUR NEEDS IF YOU WANT TOMOVE OR SELL YOUR HOME OR WANT YOUR FAMILY TO INHERIT IT. IF YOUARE IN DOUBT SEEK INDEPENDENT ADVICE.
- CGU and Norwich Union merged on 30 May 2000 to create CGNU plc- the world's 6th largest insurer, the UK's largest insurancegroup and one of the top-five life insurers in Europe withsubstantial positions in other markets around the world.
CGNU's principal business activities are long-term savings,general insurance and asset management with worldwide premiumincome and retail investment sales of £26 billion and assets undermanagement of more than £200 billion.
The combined life and pensions, general insurance and retailfund businesses in the UK operate under the Norwich Union brand,while the institutional business operates under the Morley FundManagement brand.