Just 6% of homeowners over 50 – who are aware of equity release – actually understand all of its product features according to research by over 50s experts SunLife.
For its Life Well Spent Report, SunLife interviewed 2,000 people over 50 and discovered that misconceptions about equity release are still rife amongst this age group – despite the industry undergoing significant changes over the past few decades to offer safer, better-value products to consumers.
Only 6% of homeowners over 50 know all the main facts about equity release.
When presented with a series of basic facts about equity release and asked which they already knew to be true, 94% noted at least one fact that they weren’t aware of.
The biggest misconception about equity release plans is that you cannot move house. Just 24% of people correctly identified the fact that you can still move house if you have an equity release plan in place. Less than a third (30%) knew that some types of equity release have no monthly repayments, that they can ringfence money for inheritance (known as inheritance protection), or that they can include a ‘no negative equity’ guarantee (meaning your estate is never left in debt).
Over half of homeowners over 50 would not consider equity release (57%). When asked why, the misconceptions become even more clear. Many mentioned not wanting to leave their children in debt or with a difficult estate to deal with.
However, providers who adhere to certain rules and standards laid out by the Equity Release Council can include a ‘no negative equity’ guarantee. This means the debt will never exceed the value of the house, so debt from the equity release cannot be passed on.
All the statements below are TRUE – the graphic illustrates how many misconceptions still exist
Three-quarters of those who released equity say their overall happiness has improved as a result
This includes 40% who said releasing equity significantly improved their happiness. Respondents said the main benefits of equity release are:
- That you can continue to live in your own home (57%)
- Getting a lump sum of tax-free money (50%)
- That it can help you live more comfortably (40%)
- Helping your family (35%)
- Holidays and travel (33%)
- Achieving your goals (32%)
- Reducing your debts (21%)
Some reflections on equity release from respondents:
“Got married and gave my wife the day she wanted.”
“New doors, windows, kitchen, bathroom. Credit card paid off. Loan paid off. Bliss.”
“No worries about the cost of living or the increasing cost of heating my home. I am financially better than before.”
“We were able to enjoy our cash while we are both here.”
“It was easier to do than anticipated – I understood it. It was a huge relief to pay off all my debts.”
Mark Screeton, CEO at SunLife, said about the findings:
“Equity release offerings have changed a lot over the past few decades. Today’s offerings are well-regulated by the Financial Conduct Authority and often include product features promoted by the Equity Release Council to protect consumers.
“It’s great to see that the vast majority of those who have released equity feel happier in their lives as a result. Retirement should be a time to relax and spend your time however you choose, and for some people Equity Release can be a great way to unlock more opportunities in later life.”
SunLife’s equity release calculator is a free tool that can help those thinking about releasing equity see how much they could release.