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Equity release allows you to release cash from your property without having to move. You can choose to take the money as a lump sum, in smaller payments, or a combination of the two.
One in three UK mortgage holders would consider equity release if they didn’t have to sell or downsize, according to research from investment, protection and retirement specialist LV=.
The 16th edition of the LV= Wealth and Wellbeing Research Programme - a quarterly survey of 4,000 UK adults – shows that young consumers (18 to 34) are more open to unlocking capital from their properties than those aged 65 or over, if it means they can remain in their current home.
Of those surveyed:
- Almost half (44%) of those aged 18 to 34 would consider equity release such as a lifetime mortgage.
- Only 8% of people aged 65 or over would consider this option.
The data suggests attitudes towards equity release are evolving with young people more likely to consider taking capital out of their property.
According to the research, people with a mortgage are most likely to consider equity release to cover unforeseen expenditures in later life (15%), or to fund health or care requirements when they’re older (11%). Meanwhile, 8% of respondents said they’d use the money from equity release to top up their pension income, 7% said they would use it to help friends or family financially, and 8% would enhance their lifestyle with holidays in later life.
However, UK consumers have become more cautious over the last three months with around 9% more people saying they want to delay before applying for equity release. Around 56% of those who would consider a lifetime mortgage say they would prefer to wait until interest rates improve. This rises to almost two-thirds of those over 55, suggesting people want to get the maximum benefit out of their assets when they retire.
The LV= study also shows that home ownership in retirement may be in decline amidst the changing financial landscape.
Of those with a mortgage, 3 in 10 don’t think they will have paid it off by retirement age. And for those who retired with a mortgage, equity release has become a more popular way to pay off their home, up to 1 in 14 from 1 in 25 a year ago. At the same time, 1 in 5 of those surveyed say they don’t plan to buy their own home; a figure that jumps when you ask renters (over half) and people who live alone (a third).
The LV= report reveals that older consumers approaching retirement age are choosing Individual Savings Accounts (ISAs) to save for their future, with 62% of people aged 55 to 64 saying retirement planning was a goal compared to only 22% of 18 to 34-year-olds. When contributing to an ISA, this younger age group is more likely to be saving for a new home than for retirement.
Overall, the LV= study discovered the implications of tax-free withdrawals from pensions are not widely understood. 25% of people who haven’t yet retired don’t know how much tax-free cash they can take from their pensions, and only 4 in 10 people do.
Having the right retirement planning and advice can help people make important changes to their pension savings to help them in later life. For instance, equity release provides financial flexibility by allowing mortgage holders to access funds for a variety of reasons such as home improvements, paying off debts, or investing in new ventures, all while staying comfortably in their current property.
David Hynam, Chief Executive of LV=, said:
“We found that attitudes towards funding retirement seem to shift by generation. For property owners, there is a trend away from entering retirement mortgage-free. Additionally, this wave of data suggests that there is greater interest in exploring equity release as a way of unlocking capital in property from the self-employed and younger customers.”
Notes to Editors
*LV= surveyed 4,000 nationally representative UK adults via an online omnibus conducted by Opinium in March 2024.
UK population stats from ONS. Total UK adult population is 53.2m UK adults (aged 18+).
