Stock release clients spend most of their money on home improvements, but men and women have very different views on how to spend cash
- Reducing debt is the main way women spend on releasing equity
- Men are more likely to pay with the money for home improvements
- Supporting family members has grown in popularity because of the cost of living
Spending on home improvements is the most popular use of equity release, according to research from SunLife.
More than a third of clients who release shares (39 per cent) have used the money released from their home to improve their property, spending an average of £11,100.
About one in 20 people eligible for equity release have done so, while another one in eight (15 percent) would consider doing so.
Home Improvements: More than a third of equity release clients use the money to modify their properties
Broken down by gender, the research shows that women are most likely to spend money from a home on paying off a mortgage or debt, while men choose to make home improvements.
Equity release allows homeowners age 55 or older to access a portion of the money tied up in their real estate tax-free.
Borrowers take out a loan on their home — usually up to 49 percent of its value — and they remain the sole owner.
It will be repaid with interest from their estate after they die or receive long-term care – although some plans have the option of paying back some of the money early.
Paying off debt and mortgages was the second most popular form of equity release, with a third of customers (33 per cent) using it in this way, spending an average of £18,441.
According to analysis of government data by the Equity Release Council, homeowners will have spent an unprecedented £23.3bn in mortgage overpayments by 2022, paying off a record £6.7bn in the last three months.
This is the first time since registration began in 1999 that overpayments have exceeded £6 billion.
Travel and vacations are the third most popular use of equity release funds. On average, customers spent £6,500 on travel.
SunLife’s survey found that the average amount of equity released by respondents was £50,514.
Out of lockdown: Equity release allows over-50s to tap into cash stored in home equity
The research also revealed the difference between what potential borrowers expect to spend the money on and what they ultimately use it for.
More than half of those considering releasing equity (53 percent) think they would spend the money on vacations or travel – much higher than the number of borrowers who do.
And 27 percent think they will use the money to retire early, more than double the percentage of customers who actually used the money to retire (13 percent).
Of those who released equity on their home, three-quarters (75 percent) said it improved their overall happiness, including more than half who said releasing equity “significantly” improved their happiness.
SunLife CEO Mark Screeton said, “It’s great to see that the vast majority of those who have released shares feel happier in their lives as a result.”
As the cost of living crisis hits, more people over 50 are using the equity in their homes to support family members.
The study found that 12 per cent of those over 50 who released equity did so to provide financial support for their families, giving them an average of £12,525.
Currently, 13 per cent of customers use the money for family gifts of around £4,043, with a further 7 per cent putting it towards early inheritance with gifts of around £11,040.