Equity release lending has reached £1bn so far this year, reveals research from provider LV=, which reveals that the main reason that people are choosing to unlock money from their property is to fund home improvements.
48 per cent of customers said they had taken out a loan to renovate their property. Essential modifications are at the top of the DIY to-do list, though, rather than installing a conservatory: accessibility features for disable residents, such as a stair lift or widening a doorway for wheelchair access, are the most common addition to homes.
That alone, though, has not driven the total equity release lending to £1bn: the past year has seen a large number of people under financial pressure, prompting 15 per cent of customers to loosen their purse strings or top up retirement income, and 9 per cent to clear outsanding mortgages or other existing debts.
Treating or helping out family also remains a common reason for choosing equity release, with 10 per cent stating this as their motivation.
Vanessa Owen, Head of Annuities and Equity Release at LV= said: “Whilst home improvements continues to be the most popular reason for using equity release, market growth is also being driven by the need to meet and reduce financial commitments. With the reality of living on a low pension income hitting home for many retirees, it makes sense that many wish to unlock the cash tied up in their properties. At retirement, someone’s largest asset is usually their house and for those retirees who wish to stay in the home that they love, then equity release is a solution worth considering.
“This year’s Budget announcement gives new retirees more flexibility as to how they take their pension, but they will still see their income drop when making the transition from working to retirement. As a result we are likely to see demand for equity release grow as those with small pots look to fund their later years. It is essential that retirees consider all their options and that equity release is considered alongside other retirement income solutions so that they are able to effectively plan for the future.”
Source: The Movechannel