Clearing an existing mortgage remained the top motivation for releasing equity in 2023, according to new data from Canada Life.
Funding home improvements was found to be the second most popular reason, with 28% of customers citing this as their main reason.
However, despite maintaining their top positions, both categories decreased in popularity compared to 2022.
The number of customers using equity release for existing mortgage repayments fell by 8% (from 49% in 2022 to 41% in 2023), while funding home improvements dropped by 3% (from 32% in 2022 to 28% in 2023).
The number of customers taking out equity to help with day-to-day costs also fell, from 20% in 2022 to 17% in 2023.
The analysis also showed a rise in the number of applicants looking to release equity to fund holidays.
In 2022, 15% of applications were to pay for trips, but this increased to 20% in 2023 – now sitting at pre-pandemic 2019 levels, when 21% released equity for holidays.
Sadna Zaman, proposition development manager, home finance at Canada Life, said: “Customers are continuing to use equity release for a wide variety of reasons, from home improvements to paying off existing mortgage borrowing.
“Day-to-day living remains within the top five reasons for releasing equity, with homeowners using the wealth they have built up in their properties to potentially offset increased outgoings thanks to the cost-of-living crisis.”
“The variety of motivations for releasing equity highlights the flexibility and accessibility of the options available, allowing homeowners to enjoy their retirement in a way that best suits them and their families.
“However, equity release is a lifelong financial decision, so it’s vital that the long-term costs are considered.”
