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Equity release used to clear debt during hard times

Published on 06 July 2010 11:00 PM

Equity release used to clear debt as hard times take hold

More than a third of equity release customers have used the extra cash to help clear their debts, whilst almost half have put it towards essential house maintenance, according to new research by the University of Birmingham for Age UK.1

Published today, the new report ‘Housing and Finance in Later Life' reveals that while a quarter of those surveyed have used equity release to make early bequests and large one-off purchases, the remaining three-quarters have used it as a way of boosting capital either to increase financial security and enable a more comfortable retirement or as a last resort to relieve financial difficulty or debt.

The charity is warning that although more than two-thirds of over-65s are homeowners without a mortgage,2 many are living on low to modest incomes and struggling to maintain their homes. One in seven (14%) of those surveyed were in receipt of Pension Credit, and some of the respondents felt there was no option but to use equity release to pay for housing repairs in order to continue living in their homes - a key concern for many older people. Almost two-thirds did not want to move away from family, friends and local amenities, just over half did not want the upheaval of moving house, and over a quarter said that it would have been too expensive to move house.

In these times of austerity, the charity is concerned that many older people are finding it increasingly difficult, earlier on in retirement, to maintain a decent standard of living using their pension alone. The recession has further exacerbated this problem with many older people seeing their living costs rise as their savings income falls. The report argues that this could explain why equity release customers are getting younger,3 with the average age of purchasers falling from 74 to 72. In fact, previous research for the charity found that around 25% of people are approaching state pension age with outstanding credit commitments.4

Michelle Mitchell, Age UK's Charity Director, said: "The ageing of our society is a triumph of modern life yet brings with it some real challenges. Equity release is clearly a useful tool to ease financial pressures in later life but anyone considering it as an option should first seek good quality information and advice."

Louise Overton, report author, University of Birmingham, said: "The research shows that people take out equity release for a variety of reasons with increasing numbers using it to clear problem debt. But it does not play much of a role in lifting pensioners out of poverty. This suggests a need for more consideration of how those with very low incomes and limited housing assets might benefit from equity release should they wish to use it."

Despite just less than half of those surveyed reporting that they were "very satisfied" with the value for money offered by their equity release plan, there was some good news for the industry with high levels of satisfaction reported in relation to the plan being right for their needs (75%), information and advice (79%) and safety and security (66%).

- ENDS -

Notes to editors

  1. Housing and Finance in Later Life: A study of UK equity release customers, by Louise Overton at the University of Birmingham for Age UK, June 2010. The research, sponsored by the Economic and Social Research Council (ESRC), was based on a survey of 553 equity release customers and 26 follow-up semi-structured interviews. Around three-quarters of the sample were drawn from four equity release providers and the remaining quarter was drawn from databases belonging to Age UK.
  2. Housing in England 2006/07, Communities and Local Government, 2008
  3. Housing and Finance in Later Life: A study of UK equity release customers, by Louise Overton at the University of Birmingham for Age UK, June 2010
  4. Debt and older people, by McKay et al at the Personal Finance Research Centre (Bristol) for Help the Aged, 2008
  • Age UK publishes free information about equity release which can be found by visiting our equity release section on our web site or calling the Age UK helpline on freephone 0800 169 6565 (lines are open between 8am and 7pm).
  • People can also access advice on home repairs and grants and loans by contacting their local home improvement agency. Details can be found by contacting Foundations, the national body for home improvement agencies, by visiting or calling 0845 864 5210.
  • Age UK is the new force combining Age Concern and Help the Aged. The Age UK family includes Age Scotland, Age Cymru and Age NI.

Media contact: Helen Spinney
Phone: 020 8765 7502 (out-of-hours: 07071 243 243)

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Last updated: Oct 06 2017

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