Despite property representing a major source of household wealth, equity release is largely still absent from retirement planning discussions, new research from Canada Life shows.
Among homeowners who have spoken to a financial adviser about retirement, just 7% were presented with equity release unprompted, while only 6% asked about it. More than three quarters (76%) did not discuss equity release at all.
Including later-life lending in financial planning offers homeowners an opportunity to unlock greater financial flexibility. Less than half (48%) of homeowners feel confident their savings and income will last through retirement. With property accounting for 40% of UK household wealth, accessing this wealth can be an important part of financial security.
While nearly three-quarters (73%) of homeowners are familiar with equity release, understanding remains limited and misconceptions persist. Over two-thirds (67%) did not know they could still pass their home onto their children after releasing equity, and 63% were unsure about moving house.
Four in five (82%) were unaware of the No Negative Equity Guarantee. Of these, 42% incorrectly believed they could end up owing more than their home’s value, and 40% were unsure. The guarantee ensures that neither the borrower nor their estate will ever owe more than the property’s value, providing reassurance for families.
Pete Maddern, Managing Director, Retirement at Canada Life, said:
“As people live longer and pension savings fall short, unlocking money tied up in property to supplement income will become increasingly important. With unspent pensions set to be included in inheritance tax calculations from 2027, equity release can also help individuals pass wealth to the next generation and mitigate potential tax liabilities.
It’s encouraging to see the FCA exploring how later-life lending and advice should evolve. While equity release is not for everyone, these developments can improve consumer understanding and allow advisers to have more holistic conversations about whether it could help achieve later-life and retirement goals.”
