Equity release primarily used to clear existing mortgage
The majority of equity release customers in the first half of the year used the product to clear their existing mortgage, but more are now using it to support day-to-day living costs.
According to the Canada Life’s customer data for the first half of the year, this was the most common reason for releasing some or all of a customer’s equity.
This was followed by 38% of customers using it to pay for home improvements and 20% were leveraging equity release to support day-to-day living costs.
Around 15% of customers used equity release as a gift for their family or friends, while 12% booked a holiday or bought a new property respectively and 10% purchased a car.
Alice Watson, head of marketing and insurance at Canada Life, said: “Surging inflation and a rising cost of living is understandably encouraging many people to take stock of their wealth and where it sits. Understanding the reasons why customers seek to release equity from their homes can provide an interesting snapshot into the lifestyles and needs of our customers.”
She continued that the desire to clear an existing mortgage but there was a “significant proportion of people” using equity release to cover their daily living expenses. Watson said this demand was likely driven by the cost-of-living crisis.
“Despite this, customers are also still keen to make home improvements, go on holidays and gift to friends and family. All of this simply highlights the flexibility and accessibility of modern equity release products allowing families the ability to enjoy their retirements comfortably in a way that suits them. However, equity release is a lifelong financial decision, so it is essential that people seek financial advice and talk through their decision with loved ones before agreeing to a product,” Watson noted.