The best-laid plans of mice and men often go astray. And it seems that this is also true of borrowers. With the average sum of £46,928, equity release borrowers could certainly do a lot. But what, exactly, do they actually end up doing?
Newly released research from SunLife reveals that what people plan to use equity release cash for and what they actually do with the money is not quite in sync.
SunLife asked homeowners who were considering equity release what they planned to do with the cash, and more than half (55%) said they would use it to boost their income for a more comfortable lifestyle while a third (32%) said they planned to use the cash to fund home improvements.
Around a quarter said they planned to use the cash to supplement their pension or income, and the same number said they’d use the cash to pay for a holiday. Just one in six said they’d buy a car with the money.
ER is used for DIY, boosting income and cars
But when SunLife asked people aged 55+ who had already taken out an equity release plan what they had used the money for, it was a different story.
Home improvements came up on top, with 60 per cent saying they had used their ER cash for this while boosting income dropped into 2nd place with fewer than half (41%) saying this is what they used the money for.
Buying a car was the third most common reason, with almost one in four (22%) people who had taken out a plan saying they’d used the cash to fund the purchase of a car, while holidays dropped right down to 9th, with just 7% of people using equity release cash for this purpose. (full tables below)
Homeowners release £47k on average
SunLife’s research shows that the average amount released is £46,928.
On average, homeowners with an equity release plan paid £95,448 for their current home, and it is now worth £206,458 which means, on average, they have made £111,010 and have released 23 per cent of the home’s value.
Simon Stanney, equity release director at SunLife said: "It is really interesting to see that what older homeowners plan to do with equity release money and what they actually do are not quite the same.
"While home improvements and income boosting are the top two in terms of plans and reality, when we go further down the list, the two are quite different.
"Many over 55s are dreaming of holidays, but in reality, they are more likely to use the money for things like clearing debts, helping family and replacing their car.
"And while many people do use equity release cash to improve their lives, others are relying on it to maintain them."
One in four over 55s ‘worse off’ than they expected to be
Simon concludes: "Our research also reveals that one in four over 55s say they are worse off than they thought they’d be at this stage of life and are concerned they will run out of money before they die, so it is perhaps no surprise that many are turning to equity release to supplement their income and clear debts because their financial situation is not as secure as they hoped it would be.
"And while equity release is not right for everyone, it can offer a solution to those who need an income boost and have cash tied up in their property but don’t want to move."