Using equity release to pay off an existing mortgage continues to be the most popular use of funds among customers with 46% of loans used for this purpose, new Canada Life research has revealed.

This figure is a slight increase from 45% when Canada Life carried out the research in 2020.

The next most popular use of funds was making home improvements which add extra value and enjoyment to the property, accounting for 34% of loans, compared to 38% in 2020.

Canada Life’s findings, based on customer data for the first nine months of the year, revealed that debt consolidation also remains popular with one in five using equity release in this way (19%), compared to one in four in 2020 (25%).

Customers have also been using equity release to purchase a new property, with 15% of loans used for this reason in the first nine months of the year. This compares to 10% of loans used in this way in 2020.

Canada Life head of marketing, insurance, Alice Watson, said that the reasons for advances on properties using equity release shows a “changing pattern of use”, but added that the main driver continues to be clearing an existing mortgage which is “likely” due to the volume of maturing interest only mortgages.

“Looking beneath the surface reveals a diverse mix of demand, which include new property purchases, no doubt buoyed by the recent stamp duty holiday,” Watson commented. “Lifestyle purchases remain less attractive, with fewer customers using equity to fund new car purchases while we have yet to witness a bounce back in the number of advances to fund holidays.

“The pandemic has shone a spotlight on the nation’s finances and the equity release industry has stepped up to the mark by providing flexible products that can be used for a variety of purposes. As we emerge into the ‘new normal’ the equity release market will continue to provide an overview of the nation’s financial priorities and with the help of a financial adviser, their clients can plan and secure their financial futures.”

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