EQUITY release is a financial solution used by thousands of homeowners aged 55 and over each year to help them unlock tax-free cash that’s locked in the value of their homes.
It may be beneficial to people who find themselves with most of their wealth in the value of their home but don’t have access to readily available funds.
But what were the top 5 reasons for unlocking equity in 2024?
The latest numbers from Age Partnership reveal why their customers released cash from their homes last year.
Home improvements
The top reason for unlocking tax-free cash with equity release in 2024 was to make home improvements and renovations, which was cited by 28% of customers as their main motivation.
Whether customers were looking to undertake work such as an extension or loft conversion or make practical improvements to make their homes more suitable for their needs, equity release helped customers achieve their plans.
You can choose how you release the money through equity release depending on the nature of your plans.
You could choose to take it as a lump sum if there’s a big project you’ll need a known amount of money for, such as a conservatory, or you could take it as and when you need it to help with future projects around the home.
Do you have plans to make home improvements? Find out how much you may be able to unlock
Repaying an existing mortgage
Repaying a mortgage was the second most popular reason for unlocking equity last year.
Many people may find repaying an existing mortgage allows them to reduce their committed monthly expenses, as they no longer need to make regular required mortgage repayments.
This is because with equity release, any money released, plus accrued interest, is repaid when you pass away or move into long-term care.
Providing a financial gift
Almost 11% of Age Partnership’s customers chose to unlock equity to provide a financial gift to their loved ones.
In fact, 22% of these customers were gifted a deposit for a house purchase.
It can be tough for first-time buyers saving up for their first home, and for a couple in 2024, it took an average of 11 years and 3 months to save for a house deposit, compared to just 3 months in 19741 .
Seeing loved ones enjoy their lives now was a motivation to unlock equity in 2024, however, some people may be concerned about the impact it has on leaving a future inheritance.
Some plans have the option to ringfence a portion of your home’s value so you can pass it down as an inheritance to loved ones.
This will reduce the amount you can release but will allow them to benefit from the value built up in your property now along with any equity that is available in the future.
Discover how much tax-free cash you could unlock with Age Partnership
Consolidating existing debt
Using equity release to consolidate existing debt can be an effective way to manage credit card debts or car balloon repayments.
This was another common reason why homeowners unlocked the equity from their homes in 2024.
However, due to interest rolling up, equity release could cost you more over your lifetime, so it’s important to check it’s right for your situation.
Advisors at Age Partnership will ask what rates your current debts are on and if there are any remaining terms or penalties, as this could impact whether it could be beneficial to release equity against the existing debt or not.
It could be that a debt management plan would be more suitable, or you might be able to speak to your current provider to reduce the interest rate or repayments.
New car
Equity release helped almost 7% of Age Partnership’s customers unlock the cash from their homes to buy a new car.
Some people may want to purchase a newer more reliable car, or even upgrade to an energy-efficient electric model.
Once you’ve repaid any existing mortgage, which is a condition of equity release, the money is yours to enjoy spending.
So, if you’ve always had a dream car in mind, equity release could also be used to purchase this.
Age Partnership’s calculator can help you discover how much you may be able to unlock
Could equity release be right for me?
Providing you’re a homeowner of a property worth over £70,000 and the youngest homeowner is over the age of 55, you could be eligible.
Equity release is a financial commitment that requires careful consideration and advice from specialists before taking out a plan, as an alternative such as downsizing to release funds could be more suitable for your needs.
Equity release may involve either a home reversion plan or a lifetime mortgage, which is secured against your property and will reduce the value of your estate and impact funding long-term care.
Advisors at Age Partnership can help you understand more about whether it could be right for your circumstances and provide you with an accurate quotation on how much you could unlock.
Initial advice is provided for free and without obligation. Only if your case is completed would an advice fee of £1,895 be payable. Other lender and solicitor fees may apply.
Age Partnership is a trading name of Age Partnership Limited, which is authorised and regulated by the Financial Conduct Authority. FCA registered number 425432. Company registered in England and Wales No. 5265969. VAT registration number 162 9355 92. Registered address, 2200 Century Way, Thorpe Park, Leeds, LS15 8ZB.
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