A large proportion of equity release customers use the cash released from their home to repay debts, according to research from Key Retirement Solutions.
The Key Retirement Solutions Market Monitor shows that 56 per cent of equity release customers are motivated by debts to unlock some of the value in their property, a consistent reason for taking out an equity release scheme.
Almost a quarter of equity release customers (24 per cent) use the money generated from their home to repay their outstanding mortgage, while a further third of homeowners use it to repay other forms of debt.
Using equity release to clear their debts can make a significant difference to a retired person's quality of life, KRS said, as pension incomes can be extremely limited.
"Increasingly those entering retirement are faced with a financial position which is far from what they anticipated," explains Dean Mirfin, group director of Key Retirement Solutions equity release.
"Mortgage, credit card, or other commitments are making life increasingly harder for those faced with a debt in their retirement. Equity release for many is proving to offer a solution to those who want to release the burden of debt and to improve their retirement income."
Other popular uses of equity release include making improvements to their home or garden (58 per cent), using the money to go on holiday (33 per cent), or giving the money to their children to help them get on the property ladder or meet financial commitments.
"Equity release can provide retirees with financial freedom in retirement but it's not always the right option for everyone," Mr Mirfin added. "We firmly believe no-one should commit to any form of equity release without seeking independent specialist advice."
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© Fair Investment Company Ltd