Recent research has revealed that over a third of people unlocking wealth from their home are doing so to clear debts.
The figures from Retirement advantage show that during the third quarter of last year, 35% of customers released equity from the properties to help pay off their existing mortgage as well as clear unsecured debts.
At 25%, funding home and garden improvements was another key reason for customers releasing property wealth, as well as purchasing a new property at 5%.
Commenting on the figures was Alice Watson, who highlighted the growth in mortgage debts as well as equity release. The Head of Marketing at Retirement Advantage Equity Release stated:
“Carrying residual mortgage debt into retirement is on the rise. House prices are at historic highs, household debt is growing again and interest only mortgages are maturing. This is reflected in the reasons our customers give for tapping into their property wealth.
“What’s encouraging though is that our customers are taking a holistic view of all their assets, and using property alongside pensions and other savings. What’s more, we know that our customers use equity release for multiple reasons. Clearing mortgages or other debts are popular ones, but so are going on holiday, covering daily living expenses and making home improvements.”
Watson went on to highlight the shift in generational trends when it came to house buying as well the need for consumers to make plans at an early stage.
“Current demographic trends suggest the retirement debt pattern will continue. People are buying their first property later than previous generations. At the same time, a new generation of house buyers are carrying student loan debts their parents did not.
“The good news is that with careful planning and financial advice, the options available can be assessed at an early stage. This will give people the tools to proactively manage debts while also enjoying the retirement they want.”
