You are here: Home - News -

Financial planning and retirement aspirations motivate equity release use

  • 16/05/2022
  • 0
Financial planning and retirement aspirations motivate equity release use
Financial planning and wanting more in later life are the main reasons why older borrowers take out equity release, a survey has revealed.

Standard Life Home Finance’s ‘Lightbulb Moment’ research polled 418 people who had taken out equity release and a further 94 who had enquired about it, but subsequently declined the product. 

It found 32 per cent took out an equity release product because they wanted more out of life and realised they would need extra money. A further 17 per cent opted for the product because they always knew their pensions and savings were not enough, while 11 per cent realised their savings were not sufficient after some consideration. 

In total, half of the respondents sought equity release either to boost their income or to fulfil aspirations. 

Some eight per cent said their choice in equity release was sparked by a life event which had hindered their original retirement plans and 11 per cent said they were inspired by family and friends needing their support. Some five per cent took equity release as they did not want to carry on working, but needed the money.


Careful consideration 

Of those who eventually chose equity release, two-fifths took the time to consider their options. Some 19 per cent said that before taking equity release, they felt confused as they did not know how to acquire the necessary funds.

Around 18 per cent said prior to getting equity release or another kind of financial product they knew how much money they needed but did not have it. 

The decision to take out an equity release product was not immediate for all respondents as a quarter thought about downsizing first before settling on equity release. A fifth considered using their savings.  

Some 17 per cent thought about working for longer and 19 per cent considered taking out a personal loan. 

Although they did not end up choosing equity release, a fifth of those who declined the product were initially encouraged to enquire because they knew their pensions and savings were not enough. Some 17 per cent asked about the product due to a life-altering event. 

The study also found that those who did not take out an equity release mortgage tended to be younger. 


Equity release is a ‘financial planning tool’

Kay Westgarth, head of sales at Standard Life Home Finance, said: “While historically some people have been comfortable pigeon-holing equity release as a product of last resort, speaking to customers who have taken out equity release or seriously considered this option, you can clearly see that this is not always the case.  

“Instead, it is frequently being used as a financial planning tool, a springboard to achieving retirement ambitions or an opportunity to support the wider family.” 

Westgarth added: “While a good adviser will run through all of a customer’s options at their appointment, it is interesting to note that even before they speak to someone many people are aware of the different choices they face.  Specialist advice is still vitally important but working with customers who have already started to think about their options makes the advice process smoother.” 

Will Hale, CEO of Key Later Life Finance, said: “Despite initiatives such as automatic enrolment, increasing numbers of people are finding that what they have saved into pensions and other investments is simply not enough to allow them to achieve their wants and needs in later life.  Therefore, it is not a surprise that the Standard Life Home Finance research released today highlights that the desire for a better quality of life in retirement and the need to manage a funding shortfall is driving customers to explore equity release as an option. 

“That said, it is interesting to note that many customers had already started considering options such as downsizing or working longer to make up the shortfall before speaking to a financial adviser. Rather than being a knee-jerk reaction, taking out equity release is a choice which is made after significant consideration and with the support of a qualified, specialist adviser.” 

There are 0 Comment(s)

You may also be interested in