Customers who opt for this are likely to be homeowners who are nearing the end of an interest-only mortgage. The FCA recently expressed concerns that one in five homeowners are on an interest-only For many, a lifetime mortgage may be a solution to this situation as the loan is not income based.
Overall, the average OneFamily lifetime mortgage customer now takes out over £90,000 in equity release.
12% of OneFamily customers use the loan to provide a financial gift to other family members and a further 17% are consolidating unsecured debts.
8% are using the money to buy a new property - which OneFamily says is an increasing trend amongst applicants - and they have the largest average loan ammount of £115,293.
The research also revealed that people are most likely to take out a lifetime mortgage between the ages of 60 and 69 (43%), followed by those in their 70s (30%) and an increasing number of younger homeowners in their 50s (20%).
However, older customers are likely to use the product in a slightly different way to those in their 50s or 60s. Customers who apply for a lifetime mortgage in their 70s are more likely to use it to ensure their affairs are in order. They often want to make sure the money they give to their loved ones is passed on in the most tax efficient way possible, in the form of a ‘living inheritance’.
Nici Audhlam-Gardiner, managing director of OneFamily Lifetime Mortgages, had this to say: “The baby boomer generation has seen record levels of house price growth and are increasingly using the capital they have built up in their homes over the years. Whether it be an effort to clean up their finances, take on a new project or even lend a helping hand to their nearest and dearest, lifetime mortgages are allowing people more freedom in their 50s and into their later years.
While some people will be drawn by a need to put their own finances in order, some will want to help their own families succeed in life by giving them a helping hand onto the property ladder and OneFamily research has revealed that 8.6 million parents and grandparents are now part of families that share their money across generations. In fact, over one in ten (12%) lifetime mortgages are now used for a cash gift to family members.
As intergenerational lending becomes even more commonplace, we anticipate more parents and grandparents will seek to use lifetime mortgages to make help younger family members, as well as give themselves a better retirement.”
