How do people use the cash they raise from equity release?
That was the question posed in research from SunLife, in their new Equity Release Report 2020. In the research, SunLife looks at how people plan to use their equity release cash, and how the money is ultimately spent.
They asked homeowners who were thinking about using equity release how they thought they would use the cash. More than half said it would be used to improve their lifestyle in retirement, and a third wanted to spend the money on home improvements. Almost a quarter of respondents said they planned to use the money to supplement their pension income, and roughly the same would spend it on a holiday.
Only one in six said the money would be used to buy a car. When SunLife asked people who had already taken money out of their property using equity release, the answers were slightly different. The most popular use of the cash was home improvements, with 60% using the money for this purpose.
Boosting income came next, with 41% using the cash to supplement their pension income. And then buying a car was the third most popular use of equity release money, at 22%.
Only 7% of people used their equity release cash to go on holiday. The research found that the average amount of cash raised through equity release is £46,928.
On average, homeowners with an equity release plan paid £95,448 for their current home, and it is now worth £206,458 which means, on average, they have made £111,010 and have released 23% of the home’s value.
Simon Stanney, equity release director at SunLife, said:
“It is really interesting to see that what older homeowners plan to do with equity release money and what they actually do are not quite the same.
“While home improvements and income boosting are the top two in terms of plans and reality, when we go further down the list, the two are quite different.
“Many over 55s are dreaming of holidays, but in reality, they are more likely to use the money for things like clearing debts, helping family and replacing their car.
“And while many people do use equity release cash to improve their lives, others are relying on it to maintain them.”
Before considering equity release to raise some cash from the value of your home, it is crucial to consider all of your financial planning options.
Speaking to a regulated financial adviser is an essential step to ensure that equity release is the right choice for you.
The information contained in this blog post does not constitute advice or recommendations. You should seek independent financial advice before acting on any information on this website.