Home Finance Surge in the volume of people using equity release to repay their standard mortgage

Surge in the volume of people using equity release to repay their standard mortgage

by wrich

[London, Thursday 3rd March 2022] – New figures from market-leading equity release broker Age Partnership show there has been more than a 38% increase in the percentage of people taking out equity release to repay their existing mortgage.

In 2019, 26% of homeowners taking out equity release loans did so to pay off their standard repayment mortgage, but this jumped to 36% in 2021, which makes it now the top reason that people take out equity release.

The increase is largely down to the growing number of people retiring early due to the pandemic, as well as the growth in the volume of people that are entering retirement with a mortgage in place. 

Matt Stirland, executive director of later life lending at Age Partnership said: “Due to the pandemic there has been a rise in the number of people retiring early, and this has been reflected in the sharp increase in people taking out equity release in order to pay off an existing repayment mortgage. Changes in working practices, redundancies and life choices has meant more people choosing to retire early and as a result, wanting to switch to an equity release mortgage which comes without the need to make monthly repayments.

“There is also a growing number of people entering retirement who still have a repayment mortgage in place. People are increasingly more comfortable about going into retirement with outstanding homeowner debts, whereas a few years ago people would have expected to have paid off their mortgage before retiring.

“It is a condition of releasing equity from your home that you must repay any existing mortgage on your home and people often use some of the money that they release to do this. But people are also choosing to clear their mortgages so they can raise money from their homes via equity release in order to help family members financially from the impact of the pandemic.

“With rising house prices customers are confident about making use of their property wealth as part of financial planning.”

According to Age Partnership’s figures released today, home improvements were the reason given by 24.4% of people taking out equity release mortgages in 2021, down from 26.4% in 2020, while the third main reason was a gift to support family members (12.2%).

Other reasons given were debt consolidation (7.2%), to buy a new car (5.6%), as a source of income (3.0%), to pay for holidays or travel (2.0%), to buy or move house (1.9%), later-life planning (1.1%) or to build up emergency funds (1.1%).

There was a sharp fall in the percentage of people using equity release to pay for holidays or travel plans, down from 5.4% in 2019 to just 2.0% in 2021, a reflection of the restrictions on travel due to Covid-19 over the past two years. 

2021 reasons to release equity 2021 2020 2019
Repay mortgage 35.84% 27.62% 25.83%
Home improvements 24.38% 26.35% 25.07%
Gift 12.23% 13.13% 12.48%
Debt consolidation 7.19% 9.48% 10.74%
New car 5.61% 6.89% 7.59%
Other (includes medical expenses) 5.67% 4.88% 8.42%
Holidays or travel 1.98% 4.01% 5.39%
Income 3.02% 3.38% N/A
Emergency funds 1.08% 1.61% 1.98%
Purchase or move home 1.89% 1.39% 1.12%
Later life planning (wills, LPAs, funeral plans) 1.11% 1.25% 1.39%

 About Age Partnership

Age Partnership is the UK’s No 1 lifetime mortgage broker dealing with over 25% of all cases written.

Since 2004, Age Partnership has helped over 2 million people decide if equity release is right for them.

They search a wide range of plans from leading lenders, including exclusive plans and rates that clients would not find with other brokers or lenders. This ensures that clients are recommended the best possible plan for their individual requirements.

Age Partnership is the only broker to provide holistic multiproduct advice covering alternative later-life lending options. They find the right solution for clients, whether that’s a mortgage designed for over 50’s, a retirement interest only mortgage (RIO), lifetime mortgage or utilising pension income options.

Age Partnership has been awarded a ‘Gold’ standard in customer service for 8 consecutive years by the independent body, Investor in Customers.

As well as arranging new equity release loans, Age Partnership is helping homeowners across the country save thousands of pounds in cash by reviewing their equity release plans and switching them on to lower interest rates where possible.

The Leeds-based broker has offered the switching service to external clients – those who arranged their equity release loans with other brokers – since April last year.

In some cases, Age Partnership has been able to reduce the interest rates of client plans by more than 50%, with some clients having been on these rates for a period of up to 10 years.

As a result of switching plans, each client has made a saving of tens of thousands of pounds over the life of the loan.

You may also like