Despite recent figures showing that £2.8 billion in lifetime mortgages was lent by the end of the third quarter of 2019, new research by Canada Life has found that an increasing number of people still don’t understand equity release.
15% of UK homeowners say they wouldn’t use equity release to fund their retirement because they don’t understand it. This is a three-fold increase on 2016 (5%) and makes a lack of customer understanding the second most popular reason for not using equity release in 2019.
In light of the findings, and to help UK homeowners and their friends and family to better understand equity release, Canada Life has launched the ‘Equity Release Explained’ brochure. It addresses some of the common misperceptions around equity release, including the fear that you will lose control over your home or property. This continues to be the most popular reason why homeowners don’t use equity release (21%), which is a two percentage point increase compared to 2016.
Alice Watson, head of marketing and communications at Canada Life Home Finance, said: “Despite lifetime mortgages becoming increasingly popular, we know from conversations with advisers that some people are put off the product because of comments by friends or family members, some of whom might inadvertently share incorrect or outdated information.
“To make more people aware of how lifetime mortgages work, and how they have evolved in recent years, it’s clear that the industry needs to work harder to address consumers’ myths and misconceptions. That is why we have launched a brochure for friends and family members, which outlines the key information about lifetime mortgages that people can share with those closest to them.
“Advisers are also crucial to combatting consumer misconceptions. Providing them with the support they need will better enable them to dispel consumer myths and provide customers with the right product for their needs.”
While some homeowners have misunderstandings and misperceptions about equity release, 40% people say they are likely to use the equity accumulated in their home or property in the future. However, 21% say they don’t know if they would use it.
Watson added: “It’s good news for the industry that so many homeowners expect to tap into their property wealth, helping to sustain market growth and bring the lifetime mortgage market that bit closer to mainstream financial planning.”
Canada Life’s new ‘Equity Release Explained’ brochure is available to anyone considering taking out a lifetime mortgage, who might need help explaining some of the product elements: https://documents.canadalife.co.uk/equity-release-explained.pdf