Increase in Equity Release customers using money to clear debts

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Increase in Equity Release customers using money to clear debts


New LV= figures show that home and garden improvements continue to be the main reason why customers release equity from their homes, accounting for three out of ten (31%) loans in 2017. In fact, since LV= entered the market a decade ago it has consistently been the most popular reason for taking out equity release.

However, the figures also highlight that households are still feeling the squeeze as, last year, one in five (20%) used the money from their homes to ‘top up’ their income and pay bills. A similar proportion (19%) used the money to pay off mortgages, loans or debts, a 26% increase from 2016 (15%) and up from 5% in 2015.

The numbers also show an increase in the number of people releasing equity to help or treat family and friends, with one in ten (11%) LV= customers doing so compared to 8% the previous year.

At LV=, we continue to see people using the equity in their homes to make their lives more comfortable through home and garden improvements. However, we are increasingly seeing people use their property to provide additional financial security in their retirement; whether that’s simply for additional peace of mind or to help them cope with an unexpected financial shock.

With people spending longer in retirement, and someone’s largest asset often being their home, advisers should consider what role equity release can play in clients’ retirement planning. Many households are still under financial pressure so people are increasingly looking to access money tied up in their property to provide additional income.

Mike Farrell, Protection & Equity Release Sales Director at LV=, said:

1) Reasons for equity release in 2017:

´╗┐Reasons for Loan2017
Home and / or garden Improvements31%
Top up your income (for example, to help pay bills)20%
Clear mortgage, loans or debts19%
Treat or help family and friends11%
One off purchase (such as a car or caravan)5%
Medical Treatment2%
Property Purchase2%
Provide care at home2%
Essential repairs to your property1%
Switch from another provider1%
Inheritance tax planning0%
Reason for loan % based on case counts for initial loans, further withdrawals and additional borrowing on all LV= Equity Release products across 2017. Customers were asked to give the main reason they planned to use the money for.