Two thirds of over-55s don’t know they can release equity if they still have a mortgage
Only a third of people over 55 realise that they can release equity from their home, even if they still have an outstanding mortgage, according to SunLife.
The firm said this was the biggest misconception about equity release – that you can only take out a plan if you have paid off your mortgage. Only 35% correctly understood this not to be the case.
There was plenty of confusion over other elements of later life lending too.
SunLife asked over-55s if they could correctly identify if a series of statements about equity release were true or false, and 89% of over 55s gave at least one incorrect answer.
Fewer than half (48%) realised that you can still move house if you have an equity release plan in place.
Fewer than half (45%) knew that the cash lump sum released through equity release is tax-free – 44% said they didn’t know and 11% said they thought they would have to pay tax on the money released.
Sunlife equity release service director, Simon Stanney, said: “It is easy to see why equity release is becoming a popular way for people to fund their retirement.
“The over 55s are a ‘cash poor, property rich’ generation, with five times as much money in their property as in their pensions. Our research reveals that two-thirds do not want to downsize, so equity release offers a solution.
“But unfortunately, many people are put off because they don’t fully understand the benefits of equity release. In response, we have created Exploring Equity Release – a series of blogs, articles and guides about equity release, to educate people about the features of equity release plans.”
Stanney concludes: “Our equity release guide busts the myths and helps over 55s make an informed decision about whether equity release is the right option for them.”