A large majority of homeowners taking out equity release are using the money to fund improvements which ‘age proof’ their properties and enable them to remain in their home.
That’s according to the latest analysis of the equity release market which revealed retired homeowners took out an average of £76,967 from their home in the third quarter of 2018 – £5,500 more than the same period last year.
It provides more evidence of the growing popularity of equity release said independent equity release adviser, Key, which as collated the data for its Market Monitor.
However, it has also highlighted how debt has become a problem for many retirees, with the market study revealing many homeowners were releasing money from their home to pay off credit cards and loans.
The study revealed the majority of retired homeowners, 66%, were using the cash from their equity release to fund improvements to their homes and gardens – or ‘age proofing’ to enable them to stay longer.
Addressing financial issues
However, over a quarter were using the money in order to help family or friends and 30% were using it repay their unsecured debts.
Will Hale, CEO at Key, said: “The substantial amounts customers are able to release highlights how vital property wealth is to retirement planning and the expansion is being driven by customers realising they can address a wide range of financial issues.”
He added: “Clearing debt is still a major concern for customers – 30% paid off credit cards and loans with the money they released while 21% also chose to gift some or all of the proceeds of equity release to friends and family.”
Regionally, Londoners were releasing the largest amount of cash from their homes, according to Key’s Market Monitor, taking out £141,671 on average. The lowest was in Northern Ireland where £50,000 was the average.
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