Considering the impact of house prices If you’re considering equity release, it’s important to consider the value of your home now and in the future, as it will affect any potential inheritance you want to pass on.
Over the last few decades, average UK house prices have risen steeply; more than doubling in the last 20 years. If you take a lifetime mortgage and house prices continue to rise, you may build up more equity to leave to your loved ones, as the plan continues over time. Please remember that compound interest will continue to accrue over the term of the plan.
However, it’s also important to understand that house prices may fall during the life of your plan, which would reduce the amount of inheritance remaining. But we can recommend a lifetime mortgage where you never owe more than your home’s worth or pass on any equity release related debt to your loved ones. There’s more information available about the no negative equity guarantee, and others, on page 25.
DAY ONE
AFTER 15 YEARS
Lifetime mortgage
Lifetime mortgage + interest
— £197,888
Equity remaining in your home
— £281,616
Equity remaining in your home
— £223,914
Lifetime mortgage plus interest
— £81,703
Lifetime mortgage
Property value £363,319
Property value £421,802
House price growth can help build further equity in your property which can be passed on as an inheritance or accessed again in the future through equity release.
This example assumes a fixed interest rate of 6.74% MER (Monthly Equivalent Rate) and house price inflation of 1%. Please note that these are only examples and the value of your house could go down or not increase at the same rate. Lifetime mortgage amount and property value are based on the average values in Q1 Market Monitor 2023.
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