New data from Legal & General Home Finance shows that home improvements remain the most popular reason for existing customers to release additional funds from a lifetime mortgage (53%).
Whilst some of the funds are used to increase homes’ long-term efficiency, such as installing insulation or double glazing, for other customers, the funds are essential for adapting their homes to meet their later-life accessibility needs. This allows them to stay in their forever homes, instead of moving to a new property or going into care.
Research from the Centre for Ageing Better shows that there are one million homes across the UK that need adaptations to become a suitable place for those who live there, with a third of these people being aged 55 and over.
With people living longer, property wealth can provide additional funds to make a home fit for purpose, such as replacing baths with wet rooms. According to the latest home adaptations English Housing Survey by the Ministry of Housing, Communities & Local Government, a shower replacing a bath is needed in 18% of homes that require adaptations.
Family support remains a priority, and applications from new Legal & General customers indicate that people continue to release equity from the homes to gift to their loved ones (17%).
Craig Brown, CEO, Legal & General Home Finance, said:
“Property wealth can be a valuable asset for those who are considering covering more expensive home adaptations and want to increase the quality of their life. Our research found that home improvements continue to be the most popular use of equity release among our existing customers, helping those in later life stay in their forever homes.
Using the loan value to help loved ones also remains a priority, with older generations wanting to pass on their wealth to financially support those who are starting their higher education journeys or are yet to get on the property ladder.”
Simon Gray, managing director at equity release advisory firm HUB Financial Solutions said that the update from the Equity Release Council “usefully highlights how the range and flexibility of modern equity release products continue to help people achieve their financial goals, despite the changed economic environment and higher interest rates of recent months”. He added:
“For many customers, their needs have not changed and equity release remains a powerful tool to help them generate a significant lump-sum and maintain or top up their income in retirement.
It’s in more challenging economic times that the value of high-quality professional advice is clearly seen, as it ensures people think carefully about what their goals are and the best ways to achieve them.”
Also commenting on the update, Mark Gregory, Founder and CEO of Equity Release Supermarket said that we are “seeing renewed optimism and confidence in the market after what has been a challenging H1”. He added:
“We expect equity release will continue to form a large support pool for retirement needs as people utilise their property to bridge the gap, utilising finances for lifestyle goals, home improvements, affordability, and gifting. Plus, with equity release becoming a far more flexible and versatile product than ever before, it’s proving increasingly popular. We’ve found that usage of our voluntary payment’s calculator increased by 128% in the last quarter, as people investigate how to keep the balance in check.
We’ve still some way to go until the market experiences 2022 activity levels, but now is the time for businesses to drive efficiencies and align their priorities in order to pivot for growth. Support will also be required from lenders with the aid of product innovation to fuel the industry and fulfil consumer demand.”