If you’re exploring ways to make the most of your finances in retirement, you’ve likely come across the term equity release. But what exactly is it, and why are so many homeowners opting for it?
Canada Life recently shared the top five reasons people have turned to equity release in the first half of 2024, and the results are fascinating. Let’s dive into the key reasons why equity release is gaining popularity among older homeowners and how it might help you achieve your financial goals.
1. Repaying Existing Mortgages (41%)
One of the most common reasons people choose equity release is to clear their existing mortgage. In fact, 41% of equity release users in 2024 did just that. Repaying your mortgage using the value of your home means you can enjoy more financial freedom without worrying about monthly repayments in retirement.
This option can be a lifeline for homeowners whose mortgage term is coming to an end but who may not be eligible for traditional refinancing options due to their age or income. By releasing equity, you can stay in your home, eliminate the burden of repayments, and make your retirement a little easier to manage.
2. Home Improvements (30%)
As we get older, our homes may no longer suit our needs the way they once did. Rather than downsizing, 30% of people are using equity release to make home improvements, allowing them to stay in the home they love while adapting it for later life.
Whether it’s adding a downstairs bathroom, updating the kitchen, or making the property more energy-efficient, home improvements can make your living space more comfortable and suitable as you grow older. Plus, they often add value to your home, which could benefit you or your family down the line.
3. Once-in-a-Lifetime Holidays (22%)
With retirement comes the chance to finally check off some bucket-list items, and for 22% of equity release users, that means funding a dream holiday. Whether it’s a luxury cruise, an adventure overseas, or simply spending more time with loved ones, equity release can provide the financial freedom to make these trips a reality.
For many, equity release offers the chance to enjoy life experiences that time or finances didn’t allow during their working years.
4. Consolidating Debt (21%)
As we transition from a working income to pensions or savings, managing personal debt can become more challenging. 21% of people are using equity release to consolidate unsecured debts, such as credit cards or loans.
By consolidating debt with equity release, you can simplify your finances, reduce stress, and manage your budget more effectively without having to make multiple monthly payments. For those whose income has decreased in retirement, this can provide much-needed relief.
5. Boosting Income (20%)
Last but not least, 20% of homeowners are releasing equity to supplement their income. If your pension isn’t quite stretching far enough, equity release can give you the extra funds you need to cover day-to-day living costs or unexpected expenses.
This can make a real difference in retirement, helping you enjoy more financial freedom and peace of mind.
Is Equity Release Right for You?
Equity release is proving to be a flexible financial solution for many, whether it’s to clear a mortgage, improve a home, enjoy a dream holiday, consolidate debts, or simply boost income. However, it’s important to consider the long-term impact and weigh your options carefully.
If you’re curious about how equity release works and the steps involved, I’ve put together a helpful guide in my YouTube video: 10 Steps to Releasing Equity using a Lifetime Mortgage. It’s a great starting point for anyone considering equity release and wanting to understand how it could work for them.
Ready to find out more? Visit our dedicated later life lending page to arrange your free 10 minute discovery call!
Mike Jones
Later Life Lending Specialist
Mike Jones is a later life lending specialist who is responsible for the “Mewstone Later Life Lending” service. Mike has years of experience in retail banking as well as extensive knowledge of the later life lending sector.
Choosing to release money from your home is a big decision and it’s important for you to understand all the options available to you. This means that he will always offer you unbiased advice. It doesn’t matter to us which solution or lender is recommend, as long as it is the right one for you.