"In the capital homeowners are finding it more useful as a way of clearing residual mainstream mortgage debt."
Homeowners in London are much more likely than the national average to use equity release to pay off mortgage debt, according to research from Canada Life.
Its data shows that 44% of customers in the capital used equity release to clear a mortgage, compared with just over a third (35%) who have done so nationally.
However, London homeowners over 55 are also more likely to use equity release as a way of helping family members. 26% gifted to family, rising to 32% when the proportion who used equity release to help relatives onto the housing ladder was added.
Nationally, the total figure is 19% – 16% used equity release to gift to family, with just 3% gifting specifically to help relatives become first-time buyers.
Other popular uses for equity release among Greater London homeowners include home improvements (46%), consolidating unsecured debts (30%) and day to day living (27%), though these figures are more in line with national averages.
Alice Watson, head of marketing and communications at Canada Life Home Finance, said: “These figures demonstrate the flexibility of equity release as a tool for financial planning in retirement. While elsewhere in the country the use of equity release for home improvements tends to be more predominant, in the capital homeowners are finding it more useful as a way of clearing residual mainstream mortgage debt.
"Interestingly, London’s homeowners are also using equity release to support family members. Given higher property prices and the standard equity release loan-to-value ratios available to the capital’s homeowners, being able to access larger sums may be motivating them to be more generous to relatives.
“All in all, the wide range of uses for equity release pays testament to the increased comfort homeowners have with the product and the growing willingness of over 55s to view their property wealth holistically, as akin to their other savings and assets.”