The majority of equity release customers who have unlocked cash from their home using provider Home & Capital have done so in order to repay their existing mortgage.
One of the leading providers in the equity release market, having been helping pensioners to unlock the equity from their properties for more than 30 years, Home & Capital has found that mortgage repayment is the biggest motivation at the moment for taking out an equity release
In the last six months, almost 20 per cent of Home & Capital equity release customers cited mortgage repayment as their reason behind liquidating some of the value in their homes through lifetime mortgages
or home reversion schemes
The secondary reason for homeowners taking out an equity release plan is providing financial support for their family, with almost 10 per cent of customers citing this as their motivation.
This could be reflective of the number of first time buyers struggling to get on the property ladder in a difficult mortgage market, which are therefore turning to their parents for help.
Loan repayment is the third most popular reason cited by equity release customers for accessing some of the value in their homes, accounting for eight per cent of Home & Capital's business in the last six months.
Other reasons given by customers for using equity release included making home improvements, supplementing their income, improving their lifestyles, boosting savings, and using the money to pay for care in the home.
Commenting on the results, Home & Capital equity release
spokesperson Nigel Hare-Scott said: "More pensioners are retiring with an outstanding mortgage, so it comes as little surprise to us that paying off their mortgage is the most common reason for taking out an equity release plan.
"And, as mortgages have become harder to come by, it is understandable that homeowners want to do all they can to help their children get a foot on the property ladder, which could explain why supporting their family is the second most popular motivation for releasing value from their home.
"Having outstanding debts can really eat into a retired person's income, especially at the moment with interest rates impacting on returns from savings, so clearing any debt which has extended into retirement can make a significant difference to their income," Mr Hare-Scott urges.
He is, however, concerned that some homeowners are delaying releasing equity from their home to clear their mortgage debt because they are currently paying lower rates as a result of the base rate falling in recent months, but he warns against this:
"A particular concern is the evidence that some pensioners with interest only loans are deferring taking out an equity release plan to finance the redemption of their mortgages because of the current low level of interest rates," he said, warning: "They may come to regret this delay when interest rates revert to a more normal level".
Home & Capital is a founding member of Safe Home Income Plans (SHIP), the industry body which establishes standards for homeowner protection in the equity release sector.
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