Some 43% of customers used equity release to repay a mortgage, with 31% carrying out home improvements, 27% consolidating debt, 19% travelling and 12% buying/repairing a car.
All of the top three reasons chosen by customers increased in popularity from 2009’s results; repaying a mortgage up from 30%; home improvements up from 17%; and other debt consolidation up from 15%.
Other uses for the money cited by Bridgewater customers included a combination of home improvements and debt consolidation, 7%, to provide a gift such as funding a house deposit or wedding, 7%, to fund a separation or divorce settlement, 4%, to use as a savings or safety fund, 4%, and improving or maintaining a lifestyle 4%.
Peter Welch, head of sales and distribution at Bridgewater Equity Release, says: “The three main uses for releasing equity through Bridgewater’s home reversion plans have remained the same over the past few years, with more customers suggesting they will repay mortgages, improve their homes or consolidate other debts.
“Last year we predicted these reasons would remain our most popular in 2010 and that has proved the case; indeed they have grown in popularity over 2009.
“Simply put many more individuals in or reaching retirement find themselves with far higher levels of indebtedness than they imagined. With the Credit Crunch and recession biting hard in recent times, the older population has found it increasingly difficult to find remortgage/debt finance because of the stricter criteria placed on lending into retirement.
“With this the case, individuals are now using the equity they have stored in their properties to become debt-free which not only enables them to plan more freely for the rest of the retirement but provides security of tenure in their home for the rest of their lives.
“The ability to swap debt for the equity in their home can also have a dramatic improvement in the disposable income of the retired as these consumers are suffering from a ‘real’rate of inflation far higher than the current published CPI and RPI rates.”