One in three homeowners use equity release to pay off mortgage

Over a third (35%) of homeowners, and nearly half (44%) of those in London, have used equity release to clear their mortgage, according to research by Canada Life.

London homeowners over 55 are also more likely to use equity release as a way of unlocking funds to help family members, Mortgage Introducer reports.

Over a quarter (26%) signed up for the home finance arrangement to help family members, rising to 32% when including the proportion who used equity release to help relatives onto the housing ladder.

Nationally, this figure is closer to one in five (19%), with 16% using equity release to gift to family and 3% gifting specifically to help relatives buy their first home.

Other popular uses for equity release include home improvements (50% nationally/46% in Greater London), consolidating unsecured debts (25%/30%) and day-to-day living (20%/27%)

"These figures demonstrate the flexibility of equity release as a tool for financial planning in retirement," commented Alice Watson, head of marketing and communications at Canada Life Home Finance.

"While elsewhere in the country the use of equity release for home improvements tends to be more predominant, in the capital homeowners are finding it more useful as a way of clearing residual mainstream mortgage debt.

"Interestingly, London's homeowners are also using equity release to support family members. Given higher property prices and the standard equity release loan-to-value ratios available to the capital's homeowners, being able to access larger sums may be motivating them to be more generous to relatives.

"All in all, the wide range of uses for equity release pays testament to the increased comfort homeowners have with the product and the growing willingness of over-55s to view their property wealth holistically, as akin to their other savings and assets."