Consumer lack understanding on equity release

Nearly one in four people (24%) would not know where to turn for advice about equity release, even though almost half (45%) see it as a possible option for them, according to research from Newcastle Building Society Equity Release Service.

Equity release is being seen as a viable option for meeting routine living costs in later years. Rather than splashing out on luxury purchases, most surveyed would use the money to improve the quality of their everyday life (59%).

Top 5 reasons for releasing equity from your home:

Improve quality of life
Travelling / holidays
Home improvements
To reduce IHT bill
Paying off bills / other debts

Of those who aren’t considering equity release, most felt it was because they did not need the money, or had other sources of finance (24%). And 21% would rather downsize their property to generate more cash. A lower number were either concerned about the debt incurred (17%), or reluctant to reduce their child’s inheritance (14%).

And while only 2% surveyed said they actually have an equity release plan in place, Bob Mottershead of Newcastle Building Society’s Equity Release Service believes that this is only the tip of an equity release iceberg, as consumer confidence grows and the equity release stigma starts to shift.

Bob Mottershead says: “Equity release has been the subject of a lot of bad press, but almost half of people seeing it as a possibility indicates it is becoming a mainstream option. It is clear that the work that has been done to regulate and re-educate on equity release is beginning to bear fruit. Add to this falling interest rates on equity release products and flexible options and the market is certainly set to grow.

“However, seeking advice and getting a personalised illustration before committing to an equity release product is absolutely essential, so it’s quite concerning to see from the research that so many people don’t know where to go for guidance. Equity release isn’t right for everyone so our advice is to speak to a regulated consultant, like we have at the Newcastle Building Society Equity Release Service.”