What are the top motivations for releasing equity?

The report, however, noted a decline in the popularity of these reasons compared to the previous year, with the proportion of homeowners using equity release to pay off mortgages dropping by eight percentage points, from 49% in 2022 to 41% in 2023.

Similarly, those funding home improvements decreased from 32% to 28%. There was also a slight reduction in customers releasing equity to cover day-to-day expenses, from 20% in 2022 to 17% in 2023.

An interesting trend emerged with an increase in equity release for funding holidays, which rose from 15% in 2022 to 20% in 2023, returning to pre-pandemic levels observed in 2019, when 21% of releases were for this purpose.

“Customers are continuing to use equity release for a wide variety of reasons, from home improvements to paying off existing mortgage borrowing,” said Sadna Zaman (pictured), proposition development manager for home finance at Canada Life. “Day-to-day living remains within the top five reasons for releasing equity, with homeowners using the wealth they have built up in their properties to potentially offset increased outgoings thanks to the cost-of-living crisis.

“The variety of motivations for releasing equity highlights the flexibility and accessibility of the options available, allowing homeowners to enjoy their retirement in a way that best suits them and their families. However, equity release is a lifelong financial decision, so it’s vital that the long-term costs are considered.”