In addition, the figures show that last year people continued to release equity to help or treat family and friends, with nearly one in ten (8%) LV= customers doing so, while 6% released money to pay for a holiday.
Worryingly there is also evidence that households are still under considerable financial pressure as a quarter (25%) used it to ‘top up’ their income and pay for everyday expenses, while one in seven (15%) used the money to pay off mortgages, loans and debts – up from 9% in 2015.
Vanessa Owen, Head of Retirement Solutions Products at LV=, said: ““We continue to see people using the equity in their homes to make their lives more comfortable through home improvements. However, last year we also noticed a significant increase in those relying on the money from their property to meet financial commitments like loans and debts.
“With many UK households still feeling the squeeze, equity release could provide consumers with more flexibility and help ease financial pressures. However, it’s vital any homeowners considering this product speak to a qualified financial adviser, as well as family members, before making any decision.”
Until 10th February, LV= is offering 0.5% cashback and no application fees on its Lifetime Mortgage Lump Sum+. Current interest rates range between 4.55% and 5.20% according to the initial level of borrowing¹.
Notes to editors:
¹ For example a customer aged 70 borrowing 25% of their property value would be offered a rate of 4.55% compared to a rate of 5.20% if they wanted to borrow 35% (maximum loan to value for age 70).
Reasons for equity release in 2016:
| Reason | % |
| Home and / or garden Improvements | 31% |
| Top up your income (for example, to help pay bills) |
25% |
| Clear mortgage, loans or debts |
15% |
| Treat or help family and friends |
8% |
| Holidays |
6% |
| One off purchase (such as a car or caravan) |
5% |
| Property Purchase |
2% |
| Essential repairs to your property |
2% |
| Medical Treatment |
2% |
| Provide care at home |
1% |
| Switch from another provider |
1% |
| Other |
1% |
| Investment |
0% |
| Inheritance tax planning |
0% |
Reason for loan % based on case counts for initial loans, further withdrawals and additional borrowing on all LV= Equity Release products across 2016 (total loans: 2,960). Customers were asked to give the main reason they planned to use the money for.
About LV=’s Flexible Lifetime Mortgage
LV=’s Flexible Lifetime Mortgage allows customers to borrow a percentage of their property value, in the form of a set lump sum initially, with guaranteed access to further withdrawals.Cover features
- No interest payments are required throughout the life of the loan
- The minimum LV= will lend to start with is £10,000
- Customers can take withdrawals of £2,000 or more when they need them up to the amount of their maximum loan
- A maximum loan amount is set up at the same time as the initial loan
- Guaranteed access to further withdrawals
- Interest is fixed throughout the loan
About LV=’s Lifetime Mortgage - Lump Sum+
LV=’s Lifetime Mortgage - Lump Sum+ provides a cash amount, which can be used to pay for a specific expense such as home improvements, to pay off existing debts or to pay university fees. But for many homeowners, equity release could be a solution.
Cover features
- No interest payments are required throughout the life of the loan - the loan plus interest is repaid when the customer dies or moves into long term care
- Further advances may be available in the future
- No negative equity guarantee
- Clear and fixed early repayment charges
- Excellent service and support
About LV=
LV= serves over 5.8 million customers with a range of financial products. We are the UK’s largest friendly society and a leading financial mutual.
When we started in 1843 our goal was to give financial security to more than just a privileged few and for many decades we were most commonly associated with providing a method of saving to people of modest means. Today we follow a similar purpose, helping people to protect and provide for the things they love, although on a much larger scale and through a wide range of financial services including insurance, investment and retirement products.
We offer our services direct to consumers, as well as through IFAs and insurance brokers.
Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. LVFS is a member of the ABI and ILAG. Registered address: County Gates, Bournemouth BH1 2NF.