Half of over 55s don’t know equity release cash lump sum is tax free

Michael Lloyd

July 25, 2018

More than half of homeowners aged 55 and over (55%) didn’t realise that the cash lump sum they would receive from releasing equity in their home is tax free, Over 50s experts SunLife and equity release provider Age Partnership have found.

Furthermore 64% of those aged 55 to 65 didn’t realise either. And despite the fact that three in 10 would consider taking out an equity release loan if they needed a cash lump sum, just 11% fully understand all equity release product features.

More than half (52%) didn’t realise you can still move home if you take out equity release and 65% didn’t know you could take out equity release even if you still have a mortgage.

Simon Stanney, equity release service director at SunLife, said: “Three in 10 over 55s would consider equity release, and it is possible that many more would too if they understood the product properly.

“But we are in a situation where over half of homeowners age 55 and over think the cash sum would be taxed, that they would be stuck in the same home if they did equity release and that it is not possible to do equity release if you still have a mortgage – which 18% of over 55s do.

“Our research shows that one in five over 55s say they feel worse off, financially, than they expected to be at their age. However, many have got a lot of equity tied up in their homes.”

Homeowners aged 55 believe their houses are worth £290,659 on average. Most have had their homes for more than 20 years (when the average home was worth £51,633) which means an increase in value of a whopping £239,026.

Downsizing offers a solution, but two thirds of over 55s didn’t want to move, rising to 71% for those aged 70 and over.

Stanney adds: “This is a generation that are generally property rich and cash poor due to healthy increase in the value of their homes, but inflation eating away at pension pots and increased living costs.

“But 62% of those surveyed said they categorically did not want to downsize, which means the solution for the majority could be to unlock some of the value in their homes via equity release.”

“In response to the fact there are so many ‘myths’ about equity release, we have produced a free comprehensive guide to equity release as well as a range of other helpful content, including myth busters, equity release pros and cons and the A to Z of equity release.

SunLife’s equity release plan is available to homeowners aged 55 or over, and customers typically release between £10,000 and £100,000 but the amount depends on the age of the customer and the value of the property.

Customers who arrange and attend an appointment with an Age Partnership adviser through SunLife will receive a £25 gift voucher, while SunLife’s price match guarantee means that if Age Partnership can’t beat or match the rate from another provider, they will pay the customer £500.

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