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What Are The Financial And Emotional Impacts Of Equity Release?


Generally speaking, equity release is something that retirees consider for its financial impact but it can also have a massive emotional benefit. Here, we’ll be outlining the discoveries made in the recent 20-year report by equity release specialists Key and using them to ascertain both the financial and emotional impacts of equity release.

Financial impact

According to the Key report, more than a third (35%) of respondents said that equity release had improved their general standard of living in retirement, while 30% said it allowed them to maintain their standard of living and 19% said it increased their retirement income. When it comes to equity acting as a ‘bridge’ between their working life and retirement, this is an obvious win.

It was also able to help them clear up borrowing (21% in unsecured loans and 20% in mortgage) and help that pension income go further. Clients were also able to help their families with money (23%) and minimize inheritance tax (2%). Indeed, only 10% of those responding said it has not financially improved their life in retirement, though that rises to 14% among those who took out equity release plans between four and nine years ago and 15% of those who took out a product more than 10-years ago.

Emotional impact

Debts can be an incredibly tough thing to live through. Anyone who has ever been in a significant amount of debt will probably tell you as much. However, releasing the equity from your home can actually have a major impact on your mental health and emotional wellbeing. 50% of clients said it had eased their day-to-day worries and 33% said it had helped them in doing the things they enjoyed.

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This is the side of equity release that seldom gets talked about but it needs to be discussed openly if you’re considering releasing the equity in your own home. Interestingly, 13% of clients said releasing equity also improved their social lives, which is perhaps because they were freed from the burden of having to balance their mortgage payments with their social obligations.

Finding emotional and financial peace

Equity release is not something to be feared or seen as a last option. It’s simply a means of freeing up finances and allowing people to relax and enjoy their retirement. Almost two-thirds (60%) of our respondents even said they involved their families in the process, which goes against the common narrative of sons and daughters raging against it as it might dip into their inheritance.

Equity release is still a foreign concept to many but it’s one that is making some great waves in terms of acceptability and availability. And it might just make you feel happier too!

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