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Why do people use equity release?

Category:
Your Money
Friday 21 February 2020
Last year, Key Equity Release customers had access to an average of £90k tax-free cash to unlock from their homes to spend on a variety of needs and wants.

But what was the most popular use?
According to our research, almost half (49%) of all equity release customers used the money to pay off or consolidate some form of existing debt. One in five (20%) used it to clear existing mortgages and 29% used their equity release to pay off existing credit cards and personal loans.

However, far and away the most popular reason for unlocking cash from the home was for home and garden improvements.

Putting money back into your home
Our research showed that around two out of three people (64%) used some or all of the money they released last year to improve their homes or gardens.

While renovating your home not only makes it nicer to live in, it could also add thousands to the value of your property. Whether you add an extension or give your kitchen a makeover, it could add value to your home.
Often, many who take out equity release for home improvements ‘future proof’ their properties, so they can stay in them for longer.

Other uses for equity release
Equity release isn’t a single-use financial product – many of our customers use the funds released for more than one reason. While 32%, almost a third, used some of the money to help fund holidays, a similar number – 28% - unlocked some of their property wealth to help family and friends with a financial gift; for instance to help children or grandchildren onto the property ladder.

Calculate how much you could release

Mr and Mrs Wilkins’ story
“Downsizing was never really an option for us. We really like our home and the area that we’re in. We had both always said that if we needed extra funds we would use the house. It would enable us to fund a new car, plus we wanted to refurbish the bathroom.  An adviser from Key came to see us at home and we were really impressed with the advice we received. He completely put our minds at ease, so we had no worries. We spoke to our family so they knew what we were doing.

One of the major benefits of equity release for us is knowing we have money that we can use to continue to enjoy a very comfortable lifestyle.”
 
  
What should you consider before taking out equity release?
Our fully-qualified, specialist equity release advisers take the time to understand your needs, ensuring they find and recommend the right plan for you. They’ll talk through the options available and explain that taking a plan reduces the value of your estate and may affect any means-tested benefits you’re eligible for.

You have to get specialist advice before releasing tax-free cash from your home. We understand that when you’re considering equity release there’s a lot to think about, which is why there's no pressure to proceed and we don’t charge you for our advice.

Key Equity Release plans involve a lifetime mortgage, the most popular form of equity release, you’ll still own your home and there are typically no monthly repayments. That’s because it’s a loan secured against your property and the loan, plus roll up interest is repaid when your plan comes to an end. Usually, that’s when you, or the last remaining applicant, either passes away or enters long-term care. You should always think carefully before securing a loan against your home.

All of our equity release plans meet the Equity Release Council standards and come with the no negative equity guarantee. This means you’ll never owe more than the value of your home and any debt you accrue through equity release will never be passed on to your family.

 
Page last updated: Tuesday 03 March 2020