1 in 8 Over 40s Will Consider Equity Release for Retirement

Published / Last Updated on 23/06/2021

Research from Canada Life has found that just over 12.5% of over 40s will consider equity release as part of their income plans for retirement.

Canada Life conducted a survey of 1,020 adult homeowners over 40 on their views and thoughts on equity release.  As well as the above headlines figures:

  • 28% felt equity release had a poor market reputation
  • 26% felt having debt in retirement was a bad thing and
  • 36% felt that their property wealth should be used as an inheritance legacy for loved ones and this was by far the strongest reason for not considering equity release in retirement.

Comment

The equity release market is generally only available to over 55s and becomes more competitive as we get older.  It is right that most people should not consider this form of capital raising unless you are really down to your last pennies and even then, it may be better to consider downsizing after the family has left or we are getting too old to maintain the garden or get up those stairs.

In your 40’s, many are still some way off retirement and no doubt still thinking about paying mortgages down, funding children both education and university fees wise as well as building up pension and investment funds ready for retirement.  Equity release is simply not on many ‘40 somethings’ radar.

That said, the equity release market has cleaned itself up over the last 30 years.  Gone are the days of home repossessions and negative equity with the Equity Release Council ‘no negative equity’ clause. 

On the plus side, the equity release market is now regulated as with other mortgage products and they should be considered as a legitimate source of capital given interest rates are usually lower than house price inflation, so your actual equity value in your property should increase faster than your equity release debt. 

In addition, using equity release can be an excellent inheritance tax and estate planning tool when used to make gifts e.g.  to children for them to fund house purchases that then grow tax free as well as the actually gift falling outside of your estate after 7 years as well as the equity release balance also being used to reduce the value of your estate for inheritance tax calculation purposes.

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