The research shows three quarters of people choosing equity release now opt for a drawdown product which enables them to release money as and when they need it and minimises interest payments. On average, people take £25,000 as an initial lump with 40% coming back later for more funds.
But one in seven release money at least three times with subsequent advances averaging £6,000. If these customers had taken £43,000 initially they would have been incurring interest on the full amount from day one so have in fact saved around £2,673 over five years by using a drawdown service.
For a fifth of over 50s the desire to stay in the family home is so strong that they would not consider moving, the research shows. Many spend money on home improvements so they can stay in their home for as long as possible.
More than half of people said they use some of the initial drawdown to pay for major home improvements (59%). On average, people unlock £13,000 to modernise their homes or make it suitable for them in their old age, however using a drawdown service allows them to return for more money in case of any leaks or DIY disasters.
However, many are keen to use the money to treat themselves and their family. A third of people have released an average of £6,000 to cover the cost of a well-deserved holiday of a lifetime, while a fifth give an average of £28,000 to their family showing they truly are the generous generations as this money may help put their children or grandchildren on the property ladder.
It may also help cover one-off events such as children’s weddings or grandchildren’s round the world trips that people may not have been able to plan for.
Roger Ramsden, chief executive, Saga Services, commented: “People spend most of their life looking after their home so it is good that in later life their home can work for them and give people a better quality of life or allow them to pass on wealth to their loved ones in their lifetime.
“Using a drawdown service puts people in control of the money tied up in their home, the flexibility to release money as and when they need it is rather like going to a cash point and can be much cheaper than taking out a large loan at the outset.”