The Motivations and Considered Alternatives of Equity Release

There is no one-size-fits-all catalyst for consumers using equity release. The set of circumstances and factors that might lead an individual to unlocking equity from their home will vary from person to person.

To get an insight into these differing motivations for using equity release, we asked over 500 people, who had either taken out equity release or seriously considered it, what motivated them and whether they considered any other options before deciding on equity release.

Motivations for equity release

It is true that historically equity release has had somewhat of a stigma attached to it. However, today, equity release is being used more and more frequently as a financial planning tool and a springboard to achieving retirement ambitions and offering family members support.

By a long way, our research found the most common reason why individuals choose equity release – cited by a third (32%) of customers – was because they wanted more from life as they got older and needed additional money to realise this.  Far from financing exotic trips, examples such as enjoying a meal out more often or being able to take the family away for the weekend were often cited.

Second to this, our customers said equity release had been used for preparation purposes in retirement. Nearly a fifth (17%) of customers had always known their pension and existing savings were not going to be enough, so they chose equity release to set themselves up for retirement – far from the last resort it has historically been painted as.

Alternate options

However, our research also shows that many of our customers considered other options before choosing equity release as a solution. For example, when individuals realised they were in need of additional funds to achieve their financial goals, four in ten felt thoughtful about their finances and took the time to consider what options were available to them.

Others explored the possibility of downsizing their homes, dipping into their savings, or taking out a personal loan before turning to equity release. Of these, it was downsizing that proved to be the most popular second choice, with a quarter (25%) of customers considering this option.

This clearly highlights that people are taking their time to consider all the options available to them. A good financial adviser will make their customer aware of all of the options and help them understand what role their largest asset – often their property – could play in their retirement. Our research shows this layer of support is well appreciated and valued by customers.  Six in ten (61%) felt relieved after their consultation as it gave them a clearer idea of their options.

Our Lightbulb Moments research has helped dispel the myth that equity release is a product of last resort, and it has demonstrated it to be a far more nuanced option for over 55s. To offer your clients the very best solution for a brighter retirement, explore our Defaqto 5 Star rated Horizon lifetime mortgages today.