More than half of homeowners aged 55 plus had no idea the cash lump sum they received from releasing equity in their home was tax free.
Research into people’s understanding of equity release carried out by SunLife also revealed 52% didn’t realise you could move home if you used this form of financing.
And as many as 65% of over 55s said they didn’t know that you could still take out equity release if you had a mortgage.
Just 11% of those surveyed fully understood equity release despite the fact three in ten would consider taking out an equity release loan if they needed a cash lump sum.
Simon Stanney, equity release service director at SunLife said: “Three in ten over-55s would consider equity release, and it is possible that many more would too if they understood the product properly.”
The research also revealed that one in five over-55s felt worse off financially than they expected at their age yet they also had, on average according to the research, homes worth £290,659.
While SunLife said downsizing offered a solution, two thirds of over-55s said they didn’t want to move, a figure which rises to 71% for those aged 70 and over.
Stanney added: “This is a generation that is generally property rich and cash poor due to healthy increase in the value of their homes, but inflation eating away at pension pots and increased living costs.
“But 62% of those surveyed said they categorically did not want to downsize, which means the solution for the majority could be to unlock some of the value in their homes via equity release.”
SunLife has produced a free guide to equity release and has also produced content to help bust some of the many myths surrounding the products.
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For me with a valuable property…… I would like to stay in my own home but purchase another property for someone in my family.
The equity release that I have been offered is only half the value of my house recently valued at £550,000 I have no mortgage
Why is the available cash only 50% or less of the value?
Many Thanks
Will Hale, CEO at Key said: “The loan to value (LTV) that an equity release lender will offer depends on the age and health of the customer. They will never offer the full value of the property as they need to take into account compound interest on the loan and also guard against any sudden house price falls.
“If you can afford to make monthly repayments for the rest of your life, you may want to look at a retirement interest-only mortgage as they offer higher LTVs but getting specialist advice can help you make the right choice.“