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Equity release awareness and misconceptions

Part of the Life Well Spent Report 2023

Equity release can make life-changing spends possible, such as dream holidays, renovations, gifts to family, or paying off debts. But many people don’t know the ins and outs of equity release today.

For the second year running, we asked more than 2,000 over 50s what they know about equity release, and whether they’d consider it to help fund their retirement.

Are the over 50s aware of equity release?

Equity release is a way to get tax-free cash from the value that’s tied up in your house. It’s a loan that’s secured against your home, which is repaid when you die or move into permanent care. Releasing equity could enable you to take that dream holiday or give your loved ones an early inheritance – plus much more.

When asked if they are aware of what equity release is, 85% of people over 50 said yes – the same figure as last year. But awareness has risen to 95% among retirees – 2% more than in 2022.

3% of homeowners report having taken out equity release. And of those who haven’t released equity, only 16% would consider it (although this is 1% higher than last year).

Would you consider equity release?

Only 4% know all the facts

Despite most over 50s being aware of equity release, many are unaware of the ins and outs. And awareness of most features has gone down since 2022.

For example, 30% of over 50s knew about inheritance protection in 2022, but only 24% are aware of it in 2023.

And only 4% (-2%) of over 50s know all the facts about equity release. The least known fact is that most equity release plans allow you to move house to another suitable property and transfer your plan.

When the over 50s who wouldn’t consider equity release were asked why not, misconceptions once again played a part – just like in 2022. For example, some people thought releasing equity would involve too much risk, leave their family in debt, or that they would have to pay back interest.

However, equity release products that follow Equity Release Council standards have a ‘no negative equity’ guarantee. This means you’ll never owe more than your home is worth, so debt can’t be passed on to your loved ones.

But it’s worth keeping in mind that all types of equity release products will reduce the value of your estate and could affect your eligibility for means-tested benefits. You should always discuss your options with an experienced adviser to make sure you choose the right equity release type for you.

How much equity would people like to release?

On average, people who would consider equity release would choose to release £106,747 in total – £18,604 more than last year.

At 58% (+5% since 2022), over half would spend at least some of the cash on holidays or travel, and 49% (+2%) would spend it on home improvements. At 25% (-2%), a quarter would use it to take an early retirement.

Of all the categories, holidays have the lowest estimated spend at £17,535 – just £290 more than in 2022. But people are now saying they’d like to put aside £66,500 for early retirement – £7,687 more than last year.

There is also a significant rise in how much people would like to give as early inheritance and family gifts if they were to release equity. This year, people over 50 would like to give £51,773 in early inheritance – almost £20,000 more than in 2022 – and £36,277 in family gifts – over £16,000 more than 2022.

If you released equity, how much would you spend on each of these?20232022
Early retirement£66,500£58,813
Early inheritance£51,773£32,097
Family financial support (e.g. tuition fees or home deposit)£37,840£38,808
Family gifts£36,277£20,600
Pay off mortgage* or other debts£35,311£34,515
Home improvements£27,905£24,072
Holidays or travel£17,535£17,245

* Equity release money must be used to pay off any remaining mortgage on your property first.

How are people spending the equity they've released?

Of those who’ve taken out equity release (2% of all respondents), the priorities and amounts spent differ greatly from those who are considering it.

On average, these homeowners released £51,640 (just slightly up from £50,514 in 2022) – over £55,000 less than those in the consideration stage would like to release.

Home improvements, paying off debts and holidays/travel are once again the most popular spends. But this year, people are spending more on these, with £43,579 going towards the mortgage/debts (compared to £18,441 in 2022).

People are also using their equity to give their loved ones more support, with the average spend on this coming in at £22,667 (up from £12,525 last year). Family gifting has also gone up, from £4,043 in 2022 to £15,267 in 2023.

Because of the cost of living crisis, we also asked people how much of the money they released had been put towards supplementing their income. With over 1 in 5 (21%) saying they used some of the money for this purpose, the average amount set aside for it was £16,035 – the third highest spend overall.

It should be noted that with only 2% of people over 50 taking out equity release, these findings come from a low base.

After you released equity, how much did you spend on each of these? (Note: low base)20232022
Pay off mortgage* or other debts£43,579£18,441
Family financial support (e.g. tuition fees or home deposit)£22,667£12,525
Supplement my income**£16,035n/a
Family gifts£15,267£4,043
Early retirement£11,247£17,111
Home improvements£10,285£11,100
Holidays or travel£6,406£6,500
Early inheritance£2,800£11,040

* Equity release money must be used to pay off any remaining mortgage on your property first.
**New addition to the 2023 survey

Equity release and happiness

At 71% (-4% since 2022), almost three quarters of people who’ve released equity say it’s made them happier. 25% (+4% since 2022) say it’s had no impact on their happiness.

When it comes to the correlation between equity release spending and happiness, all equity release spends improved happiness for the majority of people. Surprisingly, the spend with the least impact on happiness is home improvements.

And once again, homeowners see the three main benefits of equity release as being able to continue living in your own home, receiving a lump sum of tax-free money, and being able to live more comfortably.

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