Lifetime mortgage customers are continuing to use the value of their property to help financially support their families and to make changes to their homes, according to customer data from Legal & General Home Finance (LGHF).
Data shows that Legal & General customers use the value hidden in their homes to help family members meet financial goals, in 11% of drawdowns. With the average house price for a first-time buyer standing at £245,522 toward the end of last year, according to Land Registry data, financial gifts remain crucial to helping new buyers meet the cost of a deposit. Using equity to support family members in this way is likely to remain consistent during 2023.
Home improvements remain the most common reason for drawing down funds from the home, in 53% of applications. With the market still challenging, many homeowners may be considering improving rather than moving. However, the type of home improvements people are making could be changing.
Legal & General’s Equity Economy research, carried out last year, found that 13% of those surveyed had accessed property wealth to finance energy efficiency improvements, with insulation ranking as the most popular improvement in this group.
Craig Brown, CEO of Legal & General Home Finance, said: “The home is still likely to be one of the most significant financial assets many homeowners have, and it can play a key role in supporting retirement needs and goals. Looking ahead this year, we expect that gifting and home improvements will remain popular uses of equity release. A living inheritance can help to provide support to younger family members at a time when it’s needed most.
“Lifetime mortgages remain a practical solution for many people looking to fund later life. A stringent financial advice process, along with robust industry standards and safeguards, ensure equity release customers are supported in their decision making. We make sure customers are aware any additional drawdowns they take are at the prevailing rate which, in the current climate, may well be higher than when they originally took out a lifetime mortgage, and we’ve put in place enhanced procedures for drawdowns to make sure our customers clearly understand the impact of their financial decisions.”
