More than three in five UK homeowners are interested in releasing money from their property in later life to support themselves

A study carried out by the Equity Release Council (ERC) has found that 61% of those asked said that they might turn to equity release to boost income.

Overall 5,000 adults took part in the survey as part of the council’s Home Advantage study.

The latest research showed that there is a rise in homeowners looking to release money from their property, as the same survey three years ago revealed that a lower total of 57% said that they would look to equity release.

Homeowners from the age of 55 can then begin to access any equity on their properties via a release product.


Data revealed a growing acceptance of equity borrowing into older age

The ERC research has also revealed the growing role of property to help fund a comfortable retirement.

Due to “ultra long” mortgages which run beyond the state pension age, just 26% said that they would they would rule out taking money from the equity of their homes when they are at an older age.

Nearly two in five of those asked or 39% said that releasing equity is becoming more common, while the same figure said that it is seem as more usual to take out a mortgage in later life.

According to the ERC, both  measures have increased from 34% since 2021.

Almost half of homeowners aged 55 and over now see property wealth as an avenue to of satisfy later life financial needs.

While younger homeowners are becoming are more open to leaning on their property wealth in older age, with three quarters below 55 who said that this would be an option for them.

There was a bigger shift in attitude over the past three years amongst the 35-44 age group, where 78% said that they would be taking money from the value of their home.

This is up from 67% from the 2021 survey.


Care costs a key issue

The survey found that they main motivations for equity release include paying for care at home where 17% said that was their main concern, whereas 16% said it was to boost retirement income, and 15% said that they would put any equity gain aside for travel plans.

Nearly one in seven  are interested in ‘giving while living’,  by gifting money from their property wealth towards a deposit for a first home for a younger family member.


So what is equity release?

Equity release is essentially a range of products, that allows you to access the equity or cash that is tied up in your home when you are aged 55 and over.

There are two equity release options, lifetime mortgages where you take out a mortgage secured on your property provided it’s your main residence, while still being the owner.

You are able with this option to ring fence part of the valuation of your property as an inheritance.

The loan amount and any built-up interest is paid when the homeowner passes away or moves into long term care, but it is possible to make repayments rather then let the interest climb upwards.

It’s important to note that interest rates can be fixed or variable.

Also make sure the product has a “no negative equity guarantee”, which means that when your property is sold and agents’ and solicitors’ fees have been paid, if there is not enough left to repay the loan to your provider you or your estate is not liable to pay any more.

Secondly there is home reversion where you sell your all or part of your home in return for a lump sum or regular payments, a clause which needs to be checked out.

You have the right to keep living in the property until death , but also you have to agree to maintain and insure it.

You are again able to ring-fence a percentage of your property for later use,  for example for an inheritance by only selling part of your property.

The percentage you retain will always be the same regardless of any change in value of the  property, that is unless you decide to take further cash releases.

When the last borrower dies or moves into long-term care your property is sold, after the sale the proceeds are then shared according to the remaining proportions of ownership.

Before you turn to a home reversion equity plan, make sure that you check the minimum age that a provider allows you to sign up for one, which can range between 60 and 65.

Also look out for the percentage of the market value that you will receive, this will increase the older that you are and might vary between providers.