Recent findings from the Equity Release Council (ERC) have revealed that over three in five UK homeowners, equivalent to 18.7 million people, are considering utilizing the value of their homes to meet financial needs in later life. This represents a notable increase from the 57% of individuals who expressed the same sentiment in 2021, signifying a growing trend.
The ERC’s Home Advantage study, which surveyed 5,000 UK adults and was supported by Equity Release Supermarket, highlights the evolving attitudes towards property wealth as a means to finance a comfortable retirement. As ‘ultra-long mortgages’ are extending beyond people’s state pension age, only 26% of homeowners are currently opposed to the idea of accessing money from their homes in later life.
The study also demonstrates a shift in perceptions, with almost two in five homeowners viewing the concept of having a mortgage in later life as increasingly common and acceptable. In fact, 39% of respondents believe this to be the case, marking an increase from 34% since 2021.
Notably, there is a strong inclination among homeowners aged 55 and over to leverage property wealth for later-life needs, with 46% of this age group viewing it as a viable option. The younger generation is even more inclined, as three in four homeowners below the age of 55 are open to using their property wealth in later life.
The study also indicates a significant change in attitudes among the 35-44 age group, with 78% expressing an interest in accessing money from the value of their home in the future, up from 67% in 2021. This suggests a growing awareness of the potential benefits of using property wealth for financial security in later life.
The motivations for releasing money from their homes among homeowners aged 55 and over include the desire to pay for at-home care, boost retirement income, or fund travel plans. Additionally, supporting the financial wellbeing of younger family members is also a key priority, as evidenced by the interest in gifting money from property wealth for various purposes.
In light of these findings, ERC chief executive Jim Boyd emphasised the changing landscape of retirement planning, stating that the modern reality is far from the ideal scenario of retiring with a mortgage-free home and a substantial pension. He highlighted the necessity for products such as ultra-long mortgages, which allow individuals to balance home ownership, pension savings, and everyday expenses.
Boyd also underscored the evolving perception of property wealth, noting that it is increasingly being viewed as an asset rather than simply bricks and mortar. With almost half of over-55s considering property wealth as a means to meet later-life needs, and the younger generation being even more inclined towards this approach, it is evident that property wealth is playing a crucial role in retirement planning.
This growing trend aligns with the current economic climate and the financial challenges faced by individuals in planning for retirement. The increasing acceptance of using property wealth to fund retirement underlines the need for a comprehensive approach to financial planning, encompassing various assets to ensure long-term financial security in later life.