Increasing numbers of over 65s are using equity release to pay off debts and mortgages, according to new research by LV=.
Customer analysis uncovered evidence more than a quarter (27%) used equity release to repay loans and other debts, including mortgages, in 2019.
This compares to 15% of customers who were releasing some or all of the money tied up in their home in 2015 to clear debt.
It comes just a week after it emerged a third of people due to finish work this year would retire with debts which amounted to, on average, £17,000.
The study by equity release specialists, Key, found much of this debt was on credit cards or loans but a significant proportion was on a mortgage.
Georgina Oxton, strategic sales manager at LV= said it was ‘striking’ how the reasons for which people were using equity release were changing.
“With pension income often being less than hoped for and high levels of consumer debt, an increasing proportion of customers are using the equity in their homes to pay off loans and outstanding mortgages,” she said.
There are also advantages for customers with interest-only mortgages, who have no means of repaying the debt. Oxton explained equity release provided the added security of enabling them to live in their home until they died or went into long-term care.
Bank of mum and dad
Helping family and friends has also become a popular use of the money unlocked through equity release, LV= found.
The proportion of customers using money to help others has risen from 8% to 16% during the same period. Meanwhile the amount of people using the funds for home improvements tumbled from 32% to 24%.
Women were more likely to take out equity release than men, LV=’s analysis revealed.
Oxton added: “Helping grandchildren with deposits for their first home or the costs of higher education are just some of the reasons why an increasing number of our customers use equity release to help friends and families.
“Equity release is proving popular with women for a variety of reasons. More women are retiring with relatively small pensions due to the fact that they generally live longer than men, earning lower wages and rising divorce rates for the over 60s.”