A recent survey carried out by SunLife has revealed that many homeowners over the age of 55 are not aware of some of the key benefits of equity release, with more than half (55%) unaware that lump sums received from releasing equity in their home are paid tax free.
There were also other common misconceptions highlighted by the survey. As many as 52% of people didn’t know that you could move home after taking out an equity release plan, while 65% of those surveyed didn’t realise that you can still take out an equity release plan even if you already have an existing mortgage.
Other takeaways from the research include the fact that one in five over-55s felt financially worse off than they expected to at their age. However, with homes worth an average of £290,659, it may be that many don’t see their property value as part of their overall wealth. For some, downsizing offers a solution as a means of freeing up the value of home equity, but according to the survey, many are reluctant to pursue this option: two thirds of over-55s didn’t want to move from their current home, while that figure increased to 71% for those aged over 70. Overall, 62% said that they did not want to downsize.
While equity release schemes are growing in popularity, it’s clear that they are still not widely understood by many homeowners: only 11% of over-55s who took part in the survey agreed that they fully understood how equity release works. Simon Stanney, SunLife’s equity release service director, said: “Three in ten over-55s would consider equity release, and it is possible that many more would too if they understood the product properly.”
There was a spread of opinions on what the main advantages of equity release are. Three quarters of over-55s agreed that the ability to continue living in your home is a key benefit of equity release. Around three in five liked the fact that the amount released is tax-free, while 53% think a main advantage is the fact that you don’t have to make monthly repayments after taking equity release.
“This is a generation that is generally property rich and cash poor due to healthy increase in the value of their homes, but inflation eating away at pension pots and increased living costs,” added Stanney. “But 62% of those surveyed said they categorically did not want to downsize, which means the solution for the majority could be to unlock some of the value in their homes via equity release.”
At Premier Equity Release, we can draw on our expert knowledge to offer honest and impartial advice on releasing equity from your home, and have access to deals from both well known brand names and smaller, more specialist lenders. Get in touch with us today to discuss how we can help.