Clearing an existing mortgage is the top motivation for individuals releasing equity from their homes, research from Canada Life has revealed.
The research found 41 per cent of people cited clearing an existing mortgage as their reason for releasing equity.
This was ahead of home improvements, which was mentioned by 28 per cent, holidays (20 per cent), day-to-day living (17 per cent), and consolidating unsecured debt (16 per cent).
Canada Life proposition development manager, Sadna Zaman, said: “Customers are continuing to use equity release for a variety of reasons, from home improvements to paying off existing mortgage borrowing.
“Day-to-day living remains within the top five reasons for releasing equity, with homeowners using the wealth they have built up in their properties to potentially offset increased outgoings thanks to the cost-of-living crisis.”
Zaman added the variety of motivations for releasing equity highlights the “flexibility and accessibility” of the options available and allows homeowners to enjoy their retirement in a way that “best suits them and their families”.
“However, equity release is a lifelong financial decision, so it’s vital that the long term costs are considered,” she advised.
The research also showed that despite maintaining their top positions, both clearing existing mortgage and home improvements decreased in popularity compared to 2022.
The number of customers using equity release for existing mortgage repayments fell by 8 percentage points, decreasing from 49 per cent in 2022 to 41 per cent in 2023.
Similarly, funding home improvements dropped by 3 percentage points from 32 per cent to 28 per cent from 2022 to 2023.
The number of customers taking out equity to help with day-to-day costs also experienced a fall, from 20 per cent in 2022 to 17 per cent in 2023.
tom.dunstan@ft.com
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