Almost one in three equity release customers are using cash to fund deposits for family, according to research from Bower Retirement.
Bower’s quarterly Adviser Tracker Research found 31% of clients used some or all of the property wealth they released to help their families fund house deposits highlighting increasing use of equity release to help families.
Clearing mortgage and credit card debts and increasing retirement income remain the three most popular uses of money raised by equity release customers, Bower advisers say. Around 80% of customers are clearing mortgage debts while 65% use the cash to boost retirement income while around 55% say clients pay off credit cards.
However, the expansion of the market and rising house prices which enables average clients to release around £75,000 a time means customers can also afford to help out family while tackling their own finances.
Bower’s study found around one in five clients use cash to provide an early inheritance for family compared with 24% who use cash for holidays highlighting the growing use of money to help family.
Advisers however warn that objections from family remain the biggest barrier to customers going ahead with equity release. Around 69% of advisers say issues with family is the biggest barrier for clients compared with just 31% of advisers who say clients are concerned about interest rates.
Bower believes that the growth in retirement lending and equity release plus the launch of plans allowing different generations of a family to service loans can help address this issue.
Andrea Rozario, chief corporate officer at Bower Retirement, said: “Retired homeowners clearly want to be able to help families and are increasingly doing so as the equity release market expands.
“Clearing debts and enhancing retirement incomes remain the key priorities but with an average £75,000 being released each time there is more scope to help families and there is increasing need for support when it comes to house deposits.
“The only concern is that customers may be risking their own long-term finances by using money to help family. Independent expert advice is crucial to ensure that customers make the best possible decision for their own finances.”
The research also found around 13% of customers are taking out equity release plans principally to help family with house deposits.