17% of would-be downsizers switch to equity release
17% of potential downsizers have instead chosen to boost their income through equity release.
According to research from Bower Retirement, 17% of people that would have otherwise moved to a smaller property decided instead to raise funds by taking out a lifetime mortgage.
Just over half of Bower’s special advisers stated that the expense of moving had caused clients to change their minds, whilst 43% cited a lack of suitable property was the reason customers had not downsized.
The data revealed that emotions also played a large part in client decision making, with around half of advisers claiming that customers did not want to move away from friends and family.
Commenting on the research was Andrea Rozario. The Chief Corporate Officer at Bower Retirement highlighted that clients may only experience the benefits of downsizing if the circumstances are right.
“Downsizing is logical and sensible and can work for some over-55s homeowners but only if they can find the right house at the right price.
“But there are financial issues to deal with when moving house with stamp duty alone costing 5% on house prices above £250,000 which can make the decision to move uneconomic. Buying a £300,000 home would cost around £5,000 in stamp duty.
“It is also not just a financial calculation as there are emotions involved when moving home with the risk of losing touch with family and friends making downsizing seem a bad idea for many.”