Equity release denying 'automatic' right to inheritance

Retirees are now bucking with tradition, believing their children do not automatically have a right to inheritance.

In a worrying development for those waiting to secure inheritance in order to take their first steps on the housing ladder, only one in ten retirees say equity in the home should be for children to inherit.

The Saga Populus survey reveals that by the age of 60 a large proportion (79 per cent) of retirees will have paid off their mortgage, a figure which increases to 99 per cent when reaching 70-years-of-age.

This means that they potentially have up to £56,000 to spend on improving their life in retirement – based on releasing the average 28 per cent equity from a property.

However, the equity tied up in such properties is no longer destined exclusively for the younger generations.

Over a third (36 per cent) of respondents aged 50 to 54-years-old said they would consider releasing equity from their home to travel around the world.

This compares to 18 per cent of the over 65s – half the number of the younger generation.

Also, only 53 per cent of 50 to 54-years-olds said they would discuss withdrawing money from their property with their family, compared to 71 per cent of those over 65.

"We have seen an increasing amount of customers use the equity from their home to fund retirement," said Andrew Goodsell, chief executive of Saga Group.

"We have even had a customer recently who released money from their home to pay for their golf club membership!"

However, figures suggest there will be a real north and south divide among retirees when it comes to the ability to splash out in retirement.

Householders in the south could have the potential to live it up more or preserve more for children to inherit primarily as a result of the average house price being 42 per cent higher (£67,544) than in the north.

Chris O'Toole