Mortgage prisoners turning to equity release

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Mortgage prisoners with interest-only loans are increasingly turning to equity release, according to Key Retirement.

The firm’s latest Market Monitor says that 40 per cent of equity release customers took out a lump sum in the first quarter of 2016, compared to 30 per cent in the same period last year.

Equity release customers released £415m in the first quarter of 2016, up from £341m in Q1 2015.

Key Retirement says it thinks these withdrawals are paying off interest-only mortgage installments.

The average amount released rose 12 per cent, to £76,000, quarter-on-quarter.

Key Retirement technical director Dean Mirfin says: “It’s long been predicted that as the first large wave of interest only mortgages maturities begins more customers will turn to equity release to plug this gap.

“The record high number of equity release plans being taken out underlines how property wealth is an important part of retirement planning.

“Pensioners are making the most of successful property investment and rising house prices to substantially improve their retirement standard of living. However retiring in debt is still a major issue.”