Funding later life

With recent global and domestic events causing economic upheaval the likes of which the UK population hasn’t seen for more than 60 years, owning your home has taken on ever greater significance. It’s not just about how much it’s worth but how homeowners can take advantage of its financial potential.

A growing number of people are choosing to make the most of their property wealth by releasing money from their homes through equity release. That could be to make home improvements, to travel or to support their family through life’s milestones.

LASTING POSITIVE IMPACT

Equity release is becoming an increasingly popular way to fund later life plans. But, as well as helping the homeowner, equity release also has a lasting positive impact on wider society and the economy. There are various reasons for homeowners to release equity. According to research, just over a quarter (26%) of respondents cited home improvements and renovations, perhaps unsurprising when staying at home has become the norm for so many following the pandemic[1].

MAINTAINING LIVING STANDARDS

Of those who specified energy efficiency improvements, the majority of respondents planned to install better insulating doors and windows. Installing a different heating system and improving insulation followed behind. Meanwhile, 17% wanted to cover medical expenses. Maintaining living standards in retirement, adapting one’s home for mobility needs and paying off personal debt followed, at 16% each.

PAYING FOR HOME IMPROVEMENTS

While there is, predictably, a divergence from the initial reasons for releasing equity and the reality of how the funds are actually spent, paying for home improvements is still the winner, cited by 35% of homeowners. The average homeowner spent 20% of their released funds on this category. Next up is food, drink and clothes, on which 29% mentioned spending some of their released funds. The next three most popular expenditure areas were electronics, healthcare and domestic holidays.

PAYING OFF PERSONAL DEBT

The study showed 28% of homeowners surveyed accessed their property wealth through means other than equity release (remortgaging, downsizing, selling and moving into rented property, etc.), with the most popular impetus being, again, home improvements. Next most commonly cited reasons were paying off personal debt, followed by improving or maintaining living standards in retirement. And, it’s this final reason that was most popular for those considering equity release in the future.

SOURCE OF RETIREMENT FUNDING

More than a third (36%) are motivated by the desire for a comfortable retirement. Financing home improvements is still up there, though, at 26% – the same percentage as existing equity release homeowners – making it the second most cited reason. The study highlighted that homeowners – both retired and not – cite state and workplace pensions as their key (foreseen) source of retirement funding.

However, while 5% of retired homeowners surveyed used equity release to fund their retirement, homeowners more broadly are more than twice as likely (11%) to view this as a future retirement funding source.

Don’t forget, our professional friendly advisers are on hand to support you and can help you explore all of your options.

We are proud members of the Equity Release Council.

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