Would you use equity release cash for a holiday? | moneyfacts.co.uk
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Published: 15/11/2017

A growing number of retirees are turning to equity release as a way to bulk up their bank balance, but just what do they do with all that extra cash? Well, it seems that while some focus on repaying debt or simply boosting their income, others use at least some of their property wealth for a well-deserved break.

Enjoying retirement

Figures from Retirement Advantage show that, between July and September this year, almost one in eight (12%) equity release customers used part of the money they released from their home to pay for a holiday, providing "positive evidence that people are using assets such as property wealth to live a fulfilling and enjoyable retirement," said the report.

Another 9% of respondents said they used property wealth to buy a car, while 5% even used it to fund a new property, but the most common use of the cash was home and garden improvements, cited by 25% of customers.

"People looking for financial stability and certainty in retirement don't just want to make ends meet; they also want to live a lifestyle that provides them with happiness and fulfilment," said Alice Watson, head of Marketing at Retirement Advantage Equity Release. "I'm encouraged that customers are thinking proactively about their assets and using them to boost their retirement lifestyle."

She added that, for those looking to maintain their lifestyle in retirement, "using property wealth makes sense," particularly given the fact that you remain in control of your property when going down this route. There are also different product options depending on how (or whether) you want to start paying the loan back – you can find out more about equity release and the options available here – which offers plenty of flexibility.

"As equity release continues to grow in popularity, the breadth of uses of property wealth to support retirement will no doubt increase further," Alice concluded. However, the report also found that the traditional uses of equity release still play a part, with some of Retirement Advantage's respondents using the money to pay off debts or clear a mortgage, a finding backed up by additional figures from Key Retirement.

Clearing debt

The research found that nearly half of equity release customers (45%) still owed money on their mortgage between July and September, with an average balance of £85,119 still needing to be repaid. Another 24% owed money on credit cards and 23% still had personal loans, but a diminished income means paying for those debts could be prohibitive.

Indeed, those with mortgages were making average monthly repayments of £762, while credit card borrowers paid £289 a month and monthly loan repayments equated to an average £310, which could all put serious strain on retirement finances.

It's perhaps little wonder, then, that nearly one in four admitted that they used at least part of the money released to clear credit card debt, highlighting how equity release can help pensioners to reorganise their finances and reduce debt issues, with it being an increasingly viable solution for those looking to clear outstanding mortgages.

"Pensioners are clearly struggling with debts and the continuing interest-only mortgage repayment issue is only adding to the pressure," said Dean Mirfin, group product officer at Key Retirement. "The advantage that retired homeowners have is they've benefited from strong house price growth and have considerable wealth tied up in their homes which they can use to clear serviceable debts and substantially improve their standard of living.

"Debt repayments take a major bite out of monthly incomes with many pensioners having to set aside cash to fund debts which they can clear by taking equity release plans which do not require monthly repayments, with the loan repaid on death or a permanent move into care, when the property is sold."

Whether you're thinking of using your property wealth to clear a mortgage, pay for that once-in-a-lifetime holiday or perhaps just boost your retirement income, it can't be denied that equity release could be beneficial. Of course, it won't be for everyone, which is why it's so important to get the right advice – contact our no obligation equity release planning service to see if it could be for you, and start thinking about what you could spend the money on.


Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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