Equity release customers choose to spend the money on home improvements

Spending on home improvements is the most popular use of equity release money, research from SunLife has revealed.

More than a third of equity release customers (39 percent) have used the money released from their homes to improve the property, spending £11,100 on average.

Around one in 20 people eligible to take out equity release have done so, while a further one in eight (15 percent) would consider it.

Home improvements: Over a third of equity release customers use the money on customizing their properties

Broken down by gender, the research shows women are most likely to spend money from a property on paying off a mortgage or debt, while men opt to make improvements to their homes.

Equity release allows homeowners aged 55 or over to access some of the money tied up in their property tax-free.

Borrowers get a loan secured on their home – usually up to 49 percent of its value – and they remain the sole owner.

It is paid back with interest from their estate after they die or go into long-term care – although on some plans there is the option to pay some of the money back earlier.

Paying off debts and mortgages was the second-most-popular use of equity release overall, with a third of customers (33 percent) using it this way, with an average spend of £18,441.

Homeowners spent an unprecedented £23.3 billion overall on mortgage over-payments in 2022, paying off a record £6.7 billion in the past three months, according to the analysis of Government data by the Equity Release Council.

This is the first time quarterly over-payments topped £6 billion since records began in 1999.

Travel and holidays are the third-most-popular use of equity release funds. On average customers spent £6,500 on trips.

SunLife’s survey found that the average amount of equity released by survey respondents was £50,514.

Locked up no more: Equity release allows those over-50s to make use of the money stored in their home’s equity 

The survey also revealed the difference between what prospective borrowers expect they will spend the money on and what they actually end up using it for.

Over half of those considering using equity release (53 percent) think they would spend the money on holidays or travel – much higher than the proportion of borrowers who do.

And 27 percent think they will use the money to take early retirement, more than double the percentage of customers who have actually used the money to stop working (13 percent).

Of those that have released equity from their home, three quarters (75 percent) said it had improved their overall happiness, including more than half who said releasing equity ‘significantly’ improved their happiness.

Mark Screeton, chief executive at SunLife, said: ‘It’s great to see that the vast majority of those who have released equity feel happier in their lives as a result.’

As the cost-of-living crisis bites, more over-50s are using the equity in their homes to support family members.

The study found that 12 percent of over-50s who have released equity did so to provide financial support to families – giving them £12,525 on average.

Currently, 13 percent of customers use the money for family gifts of around £4,043, with another 7 percent putting it towards early inheritance with gifts of around £11,040.