New figures from Canada Life reveal the flexibility of equity release as a tool for financial planning in retirement, both as a means to unlock wealth in the immediate term and with a view to the future. The analysis demonstrates how many people are un-tapping the value of their property to fix-up their home, or increase their comfort and security as they grow older. Home improvements were the most popular reason to take out equity release in 2018, with almost half (48%) of customers using some of the funds unlocked from their property towards enhancing homes and gardens.
The data, based on Canada Life’s customer information for 2018, shows a slight rise in the number of customers who used equity release for home improvements in Q4 2018 (47%) compared with the same quarter in 2017 (46%). Although these figures did not reach the high of Q3 2018 (50%), home improvements continue to be the most popular use for equity release.
Of the 47% of Canada Life customers who used equity release to improve their home or garden in Q4 2018, over a third (37%) used the home finance product for improvements adding value or extra enjoyment, such as extensions or conservatories. The remaining 10% used equity release for accessibility improvements that made their homes safer or more comfortable, such as stairlifts or wheelchair ramps.
Canada Life’s data shows that the second most popular use of equity release in 2018 was to clear existing mortgages (38%). The biggest year-on-year shift was in the number of people unlocking the value of their home to clear a residual mortgage in Q4 2018 (44%), up almost 10 percentage points on Q4 2017 (35%). Other popular uses for equity release among UK households in 2018 was holidays (22%), day to day living (21%) and gifting to family (16%).