A study has found that more lifetime mortgage borrowers are using their loans to pay for home improvements rather than to repay their mortgage.
Later life mortgage advice firm Responsible Life analysed its client base and found that for the first time, the majority of borrowers were unlocking their property wealth to renovate their homes.
For five of the nine months recorded this year, this has been the main driver for taking out equity release. In contrast, Responsible Life said there were no months in 2020 or 2021 where home improvements were the main reasons for taking out equity release.
The last time repaying the mortgage was not the main driver for equity release was in 2019, the broker firm’s records show.
‘First time we’ve seen such a change’
The firm said the trend was likely temporary and driven by the boom in property prices during the pandemic. On average, house prices in the UK were 15.5 per cent higher in the year to July 2022 and since 2020, the average home has seen a £60,178 rise in value.
Steve Wilkie, executive chairman of Responsible Life, said: “This is the first time we’ve seen a change like this in the equity release market. You used to be able to guarantee that mortgage repayment would be the most popular reason customers would take out a lifetime mortgage.
“This year, we’ve seen that assumption turned on its head and it’s likely to be a symptom of how, for homeowners, the proportion of their wealth tied up in their main home has ballooned over the past two years. We expect mortgage repayment to regain its crown in the medium term, but it’s significant that what was once considered a product of last resort is now clearly anything but.”
If you would like to release equity in your home, for whatever reason from home improvement, to helping the family or paying off your mortgage, please contact us today to arrange a free no obligation consultation in the comfort of your own home.