Equity release a “useful tool”, says Age UK

More than a third of equity release customers have used the extra cash to help clear their debts, while almost half have put it towards essential house maintenance, according to new research by the University of Birmingham undertaken on behalf of Age UK.

The report, entitled ‘Housing and Finance in Later Life’, shows a quarter of those surveyed have used equity release to make early bequests and large one-off purchases, while the remaining three-quarters have used it as a way of boosting capital either to increase financial security and enable a more comfortable retirement or as a last resort to relieve financial difficulty or debt.

The charity is warning that although more than two-thirds of over-65s are homeowners without a mortgage, many are living on low to modest incomes and struggling to maintain their homes. One in seven (14%) of those surveyed were in receipt of pension credit, and some of the respondents felt there was no option but to use equity release to pay for housing repairs in order to continue living in their homes, a key concern for many older people. Almost two-thirds did not want to move away from family, friends and local amenities, just over half did not want the upheaval of moving house, and over a quarter said that it would have been too expensive to move house.

Michelle Mitchell, Age UK’s charity director, said: “The ageing of our society is a triumph of modern life yet brings with it some real challenges. Equity release is clearly a useful tool to ease financial pressures in later life but anyone considering it as an option should first seek good quality information and advice.”

Louise Overton, report author, University of Birmingham, said: “The research shows that people take out equity release for a variety of reasons with increasing numbers using it to clear problem debt. But it does not play much of a role in lifting pensioners out of poverty. This suggests a need for more consideration of how those with very low incomes and limited housing assets might benefit from equity release should they wish to use it.”