A lack of understanding remains a major obstacle for the equity release market, as figures reveal the number of people unsure about what it entails has trebled.
The findings by Canada Life showed that 15% of UK homeowners said they wouldn’t use equity release to fund their retirement because they don’t understand it, a threefold increase on the 5% reported in 2016.
It makes a lack of customer understanding the second biggest reason for not using equity release in 2019, despite recent figures showing that £2.8 billion in lifetime mortgages was lent by the end of the third quarter of this year.
To tackle the issue, Canada Life has published its “Equity Release Explained” brochure addressing some of the common misperceptions around equity release, including the commonly cited fear that people will lose control over their home or property.
Alice Watson, head of marketing and communications, Canada Life Home Finance, said: “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.”
Despite the lack of understanding, Canada Life said its research also found two in five (40%) people say they are likely to use the equity accumulated in their home in the future, while 21% said 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 an explanation of some of the product elements.