A flexible financial solution for homeowners aged 55 and above
As retirement approaches, some homeowners seek innovative ways to access the wealth in their homes. Recent research by the Equity Release Council reveals a significant rise in interest among UK homeowners over 55 in equity release options. Over three in five (61%), representing about 18.7 million individuals, contemplate using their property’s value to support their financial needs during retirement. This marks a notable increase from 57% in 2021.
Understanding the types of equity release
If appropriate, equity release offers a flexible financial solution for homeowners aged 55 and above, with two primary types available. The most prevalent is the lifetime mortgage, where you borrow money secured against your home. The loan is typically repaid when the property is sold after death or upon moving into permanent residential care. Alternatively, a home reversion plan allows you to sell all or part of your property while still living in it until similar conditions are met.
Changing attitudes toward retirement borrowing
A survey of 5,000 UK adults, supported by Equity Release Supermarket, highlights a shift in attitudes toward borrowing in retirement. More homeowners now see it as common (39%) and acceptable (39%) to have a mortgage in later life, up from 34% in 2021. Only 26% dismissed using home equity in their older years. Almost half (46%) of homeowners aged 55 view property wealth as a key resource for addressing their later life needs.
Financial motivations for equity release
The motivations behind tapping into property wealth are diverse. Meeting care-related expenses (17%), boosting pension income (16%), and funding travel plans (15%) are among the top reasons for considering equity release. Additionally, supporting younger family members financially is becoming a priority. The Equity Release Council found that one in seven (14%) homeowners are interested in ‘giving while living,’ using property wealth to help family members with a deposit for their first home—another 13% aim to support other financial goals for their younger relatives.
Impact of longer life expectancy
Historically, mortgages were expected to conclude at the end of their term. However, increasing life expectancy and changing attitudes have led to sustained demand for borrowing options in later life. Reduced pension provisions and savings have also contributed to this trend. As people live longer, there is a growing need to redistribute wealth, fund care, replace mortgages, or achieve lifestyle objectives. The equity release sector has adapted, offering broader opportunities to meet these evolving consumer demands.
