Main reasons for equity release
To understand the motivation for equity release customers, we can look at the main reasons for equity release. In 2022 the equity release provider Canada Life released its own findings that give us some helpful insights.
Clearing the mortgage
Canada Life’s customer data shows that exactly half (50%) of customers were using some or all of their money to pay off an outstanding mortgage. It seems a huge motivation for equity release customers is enjoying retirement without the financial burden of monthly mortgage payments.
Home improvements came second in the report, with 38% of customers citing this as a reason for taking a plan. In addition to increasing the value of your home, making improvements such as major repairs could also help you to remain in the home you love, rather than having to sell up.
In a telling sign of today’s economic climate, one in five customers (20%) were using equity release to help cover their day-to-day living costs. Similarly, 15% of customers are unlocking their money to gift to family and friends.
Being able to book luxury holidays and getaways abroad (14%) continues to be a popular reason for equity release. Clearly, the motivation for some equity release customers is to travel and see the world, perhaps to make the most of their retirement.
Buy a new property
Interestingly, more than one in ten customers say they are using some or all of their money to buy a new property (12%). Whether this is to buy a second home or to help them move up the ladder to a more expensive home is unclear. However, it does suggest the motivation for equity release for this particular group is to boost their property portfolio.
Buying a car
According to the same report, one in ten customers are using their money to buy a car. With the cost of second-hand cars rising in recent years, it can be expensive to buy a newer model if your current motor has reached the end of its life. It seems that equity release is helping homeowners to maintain their independence with car ownership.