How do people use the money released with equity release plans?

Repayment of debt is a common use of Equity Release. In 2022 £3.7bn was released to repay debt, 60% of the overall amount released. As customers looked to make their income stretch further in the face of rising living costs it was no surprise that repayment of a mortgage – often a household’s single largest monthly expense – was a particularly popular reason, with 30% of all funds released in 2022 used for this purpose. Clearing unsecured debt and remortgaging existing Equity Release plans were also common reasons for releasing equity.

Home and Garden Improvements continues to be a common reason for people to release equity with 39% of customers in 2022 using some of their equity to add value to their homes in this way.

A recent study (Institute of Fiscal Studies February 2023) reported that half of the £1.7bn of gifts handed over in the UK are used to buy homes as ‘the bank of mum and dad’ continues to support their families aspirations to get on the housing ladder. Certainly this remains a popular reason for Equity Release with 14% of the equity released in 2022 used for this purpose.

Finally, whilst levels of equity released for spending on holidays remains subdued compared to what we’ve seen historically. In 2022, 14% of customers used some of the equity they released to pay for a holiday.

For more information about Equity Release why not have a look at the information videos on our website – retirementsolutions.co.uk.