"[Only] 8% understood the difference between a lifetime mortgage and a home reversion plan"
New research from Boon Brokers revealed that one in eight homeowners over the age of 55 (12%) have been put off releasing equity held in their home because they’re worried that their families wouldn’t want them to. Homeowners in Scotland were most worried that their families would disapprove (15%) and those in the South West were least worried (9%).
In 2020 £3.89 billion was released to homeowners in the UK via equity release.
Boon Brokers conducted independent research with almost 1,000 homeowners aged over 55, which revealed many didn’t have a clear understanding of how modern equity release products work. One in 10 (9%) admitted they were worried it would leave their children with debts to cover – despite products now having a 'no negative equity' guarantee - and only 8% understood the difference between a lifetime mortgage and a home reversion plan, showing that consumer understanding of later life lending is still low.
However, when asked what they would use funds released through equity release for, most said it would simply be to help with day-to-day living costs – or to help their family. The top five reasons given were to fund retirement living costs, helping children financially, travel, paying for home or garden improvements, or to pay off debt.
Gerard Boon, founder and partner at Boon Brokers, said:
“It’s interesting that the fact they suspect their family may disapprove is putting homeowners off equity release and yet from our experience, and this research, many applicants are taking that money out to help their children get a first step on the property ladder. It seems that others feel the need to preserve the largest possible inheritance for after they’ve passed away – and yet for many of the next generation, the biggest need for a cash sum is now. We always recommend that families discuss their financial options with a qualified, whole-of-market, mortgage adviser, as there can be a lot of assumptions and miscommunication around money."
