Equity release helped 46 first-time buyers get onto the property ladder each week in 2018 according to figures released by Canada Life.
Customer information from the firm revealed there had been an increase last year in the proportion of people who were unlocking money invested in their home to support family members get onto the property ladder.
It has estimated one in 34 customers – or 2.9% of its 82,000 equity release customers – used the money to help first-time buyers get onto the property ladder, which was a rise on the previous year’s figures.
Last week, specialist bank Aldermore revealed, of those using the Bank of Mum and Dad to purchase their first home, nearly a quarter were able to do so because their parents had released equity from their home.
Alice Watson, head of marketing and communications at Canada Life Home Finance, said the equity release market continued to grow as more people approaching or in retirement became open to the benefits the products could offer them and their families.
“Rising property prices can cause older homeowners to worry about how their loved ones will get onto the housing ladder,” said Watson.
“Many are increasingly aware of the intergenerational benefits of unlocking their own property wealth to help the younger generation secure their first home.
“As always, it is important that people consult a professional financial adviser before using equity release in this way, as it won’t be suitable for everyone and may affect their tax position.”
Improving the home
According to Canada Life’s data, home improvements was the most popular reason for taking out equity release in 2018. Nearly half of its customers used the money released to enhance their home or garden and Canada Life said this could help family members.
Watson explained: “The younger generation can also benefit from the fact that equity release is often used to enhance people’s existing properties.
“Though this is a less direct means of support, home improvements increase the value of the property, meaning there is likely to be a large pot of money available in future that could be drawn on to provide a much-needed deposit or a living inheritance.”
Article written by Kate Saines for www.whatmortgage.co.uk