• March 29, 2024
 Third of over-55s will use equity release to boost retirement

Third of over-55s will use equity release to boost retirement

New research from Canada Life reveals that a third (30%) of UK home owners aged 55 and over with defined contribution pension savings are planning to release equity from their homes to boost retirement income.

The research, which polled 506 UK adults with a defined contribution pension, and not yet drawing an income from it, shows that over-55s with pensions valued above £200,000 are more likely to release equity (42%) than those with pensions valued at less than £200,000 (27%).

The data also revealed that 35% of over 55s earning in excess of £50,000 are more likely to consider releasing equity as part of their income plans and are much more likely to consider their homes as part of their retirement plan. Whereas just 22% of those earning less than £20,000 and 33% of those earning between £20,000 and £50,000 would make the same considerations.

Alice Watson, head of marketing for insurance at Canada Life, commented:

Modern equity release products have the flexibility and accessibility which families and homeowners are looking for in order to enjoy their hard-earned retirements comfortably. However equity release is a lifelong financial decision so it is essential that people seek quality financial advice and talk through their decision with loved ones before agreeing to a product.”

The equity release market has now returned to a period of growth for the first time since 2018. The Equity Release Council issued annual 2021 figures in January this year, revealing that the market had grown by 24%, with record amounts of property wealth being accessed in 2021 by more than 76,000 new and returning customers.

David Burrowes, Chairman of the Equity Release Council, commented on rising equity release market activity:

Cost of living pressures are just one of many reasons why homeowners are choosing to cash in on years of wealth accumulated in their homes. Increasing loan sizes partly reflect the rise in house prices and a more affluent type of customer using lifetime mortgages to plan their finances or gift a living legacy to family members.

Having proved itself to have solid foundations through a period of uncertainty, the equity release market’s return to growth has just as much to do with trust and innovation as it does with external factors as households look to manage their finances in later life.

Equity release products have continued to evolve in recent years with new providers and features adding to their appeal. Increasingly flexibility has brought lifetime mortgages closer to their residential equivalents, by offering capital or interest payment options alongside long-term, time-honoured protections against rising interest rates and negative equity.”

Annie Simmons