Many of the most cited barriers to using equity release products, such as to remain in control of a property and to be able to pass it on as inheritance are based on misconceptions, Retirement Advantage has claimed after carrying out a survey.
The most popular reason cited as to not use equity release was “I don’t want to lose control of my property” at 24%.
In second place was “I don’t want to lose ownership of my property”. In addition, 16% said they would not consider equity release because they want to pass their property on as inheritance.
Alice Watson, head of product and marketing at Retirement Advantage, said: “The popularity of equity release is surging nationwide, yet we still see evidence of myths around the products which are holding people back.
“This is a worry, especially at a time when more people want to stay in their existing properties when they retire rather than downsize.
“There is no danger of equity release customers losing ownership or control of their property, so long as they abide by the terms of the mortgage.
“Likewise, using an equity release product and leaving your property to next of kin are not mutually exclusive. In fact, in Q4 2017, one in five customers used some or all of the money they released to gift an early inheritance or help first time buyers onto the property ladder.”
Among over-55s, a desire to leave property as an inheritance was the joint-most cited barrier to using equity release.
Some 64% of people want to remain in their property when they retire, up from 59% in 2017. In comparison, only 20% would consider downsizing – a drop from 26% last year.
Watson added: “These simple misunderstandings around equity release threaten to deny people a potentially valuable source of retirement income.
“With pensions and other savings unlikely to meet retirement income aspirations, there is a need for more people to get used to exploring property to help them reach their desired standard of living.”
“Financial advisers are in a unique position to guide people through the options, highlighting the facts and busting the myths.
“As part of any retirement conversation, we recommend that advisers take the opportunity to point out some common misunderstandings around equity release products.
“Equity release won’t be right for everyone. But a thorough consideration of property alongside other assets should be part of a holistic look at retirement finance options.”