More and more customers are taking out equity release loans to boost day-to-day retirement finances as well as funding holidays and home improvements, figures from Retirement Advantage reveal.
As of the third quarter of 2016, 16% of equity release loans taken out by Retirement Advantage customers this year have been partly or solely for daily living expenses. This is an increase of 5pp on the previous quarter and almost 10pp on the same time a year ago.
Alice Watson (pictured), head of marketing at Retirement Advantage Equity Release, said: “The growth in over-55s using equity release to put a bit of extra money in their pocket through their retirement reflects the extent to which it is now viewed as a sensible option in a holistic approach to retirement planning. Alongside pension pots and other savings, property wealth is growing as a proactive source of income to boost the quality of retirement for increasing numbers of people.
“This sits alongside our customers using equity release for those set piece expenditures often prioritised in retirement – holidays of a lifetime, home improvements or gifts to family – and is further evidence of the diversity and maturity of equity release today.”
The most popular reasons for taking out an equity release loan for Retirement Advantage customers are to clear existing mortgages (cited by 45% of their customers) and for home/garden improvements (41%).
Watson added: “Fuelling this diverging use of equity release is product innovation. Advisers discussing equity release with clients can now draw upon a wealth of products depending on their clients’ needs. The challenge for the equity release industry is to maintain the pace of product innovation, to be able to cater for the new needs of future customers too.”