Taking an Equity Release Plan usually follows a desire for something specific, and those specific reasons can almost be anything. However, there are some reasons that crop up again and again.

Here are five of the most common reasons for taking an Equity Release Plan.

Paying off an existing mortgage or other debts such as credit cards and loans.

According to research by LV= in June 2022:

• A third (4.5m) of mortgage holders don’t think they will have paid their mortgage off by the time they reach 65.
• 9% (1.2m) of mortgage holders are not sure they will ever be able to pay off their mortgage.
• 1.5m of those that are already retired said they still had outstanding mortgage debt when they finished work for good. 

While meeting the monthly commitment of a mortgage may well have been comfortable prior to retirement, the inevitable reduction in earnings that occurs at retirement can cause serious hardship or at the very least a reduction in the quality of living that had been expected.

Equally, retirement with debt such as credit cards and other loans will also have a detrimental effect on a standard of living when there is no longer a working income coming in. Using an Equity Release Plan to clear this kind of debt is one way that this problem could be alleviated.

Exchanging unsecured debt such as credit cards or personal loans for secured debt is something that has to be looked at carefully. You really need to look at exactly what you are doing and the consequences before going down this path.

Any experienced, fully qualified and independent adviser should talk you through the benefits or otherwise before assisting you with going ahead.

A parent or grandparent wanting to try and help their children or grandchildren.

A 10% deposit on a £250,000 house plus about another £5,000 for fees and several expenses adds up to £30,000.

While this is a substantial amount for most people to save, it is a relatively modest amount to take as an Equity Release Plan and the satisfaction gained from helping is something that every parent or grandparent understands.

One thing to consider though is the number of children in the family because helping one will likely have a detrimental effect on the inheritance amounts of the others.

Everything you need to know before your parents take Equity Release

The opportunity to improve lifestyle

This can be anything from home improvements to holidays to buying a new car. It may be that the thinking behind fixing the house up or updating the car is a practical one as it will reduce the need for maintenance on the house in later life, or reduce the risk of expensive car repair bills that are more common with older vehicles. It may well be that the feeling of security that is felt from having some emergency cash in reserve is a good enough reason for some people.

Pay for private medical treatment

It is a fact of life that as we get older, health issues are more likely to occur. Many people use Equity Release as a way to pay for private medical treatment, mainly for the benefits that come with not having to wait for treatment.

Looking to move an existing Equity Release Plan to a new provider

This might be a surprise, but it can and does make financial sense in certain circumstances.

It isn’t something that should be done without the aid of professional help as there are many things to consider, not least the range of fees and possible penalties that have to be factored in.

The chances are however, that since taking an Equity Release Plan new products and possibly new providers may have entered the marketplace with a more competitive contract. You may even wish to take further funds, especially if the passing years have now put you into an age band where you can take larger amounts if you wish.

Can switching Equity Release providers save you money?