Eight in 10 choose equity release to avoid downsizing
Four in five equity release customers wanted to stay in their home rather than downsize, according to Standard Life and Age Partnership.
The equity release firms found that downsizing didn’t appeal for a host of reasons.
Nearly 10% of equity release borrowers were put off downsizing because of the costs involved – in particular Stamp Duty. In 2018 the average cost to buy and sell a property in the UK was £10,210 which includes an average bill of £1,800 for Stamp Duty.
Others stated that they struggled to find another location or property they wanted to move from their existing home to. This was the case for 4% of respondents.
Guarantees with equity release
The no-negative-equity guarantee included with equity release gave many borrowers the reassurance that their estate would never owe more than the value of their property.
The research showed that 71% of people claimed the guarantee influenced their decision to take out equity release. All equity release plans approved by the Equity Release Council include this guarantee, which ensures those releasing equity will never owe more than their home’s value.
Laura Laidlaw, head of customer communications at Standard Life, said: “For an increasing number of people, property – often the home they live in – could be the answer to freeing up extra money. Either to supplement income in later life or to gift to loved ones.
“Our research would suggest that the emotional aspect of remaining in your home is what leads many to opt for equity release. A lack of supply, the pressure of moving and the costs of downsizing mean for many, it is not always a practical choice.”
“Having a good understanding of the wide range of available options will go a long way to helping those nearing or in retirement do what is right for them. Anyone looking to use their homes for extra income should speak to experts for guidance on what could be right for them.”