Nearly Three Quarters Equity Release Pays Off Mortgage and Debts
In new figures for borrowing in the third quarter of 2019, Canada Life has revealed that 49% of equity release customers used their equity to pay off mortgage debt, whilst 23% of customers used it to consolidate unsecured debts. That’s a total of 71% or equity release scheme, nearly three quarters of all equity release. In addition, their figures show a rise of 14 percentage points on the percentage of people using equity release to clear existing mortgages, when compared to Q3 2018.
Of the remaining 29%, the next most popular reasons for equity release are home improvements for extra value or enjoyment, holidays, helping family with finances and buying a new car.
Alice Watson, head of marketing and communications at Canada Life Home Finance, said:
“These figures show the continued appeal of lifetime mortgages to help with financial planning in retirement. We’ve seen the percentage of people using equity release to pay off an existing mortgage rise over the course of 2019 and with property values on the up, it’s a trend we expect to continue.”
House prices are high and the cost of borrowing low. Taxes are up and we get penalised for having wealth in life, in elderly care and in death. It is an obvious financial planning option for homeowners to share some of the wealth in their property with family members earlier rather than leaving it to chance. Although the fact that 71% use it to clear property debt is worrying. As a finance industry, we should do more to encourage people to manage property debt earlier.