Key Retirement Solutions has today revealed the findings of its Equity Release Market Monitor.
Mirfin says although drawdown accounted for 74% of its own sales – compared to the market average of 55% – many borrowers are taking out the money in one lump sum, when a drawdown plan could be better.
He says: “We are concerned that not enough clients are using drawdown and we want to see its share of the market increase.
“Customers using drawdown plans benefit from lower borrowing costs because they are able to draw funds when required, rather than in a one-off lump sum.
“We believe there is still work to be done in the sector to ensure that customers are not taking on single advance equity release when they do not have a requirement for the funds all at once.
“Fact finds need to identify clearly when funds are required. Drawdown can save customers many thousands of pounds on the overall cost of borrowing.”
The KRS Market Monitor shows total funds released rose 5.4% during the year to £959.6m – the first rise in four years – while plan sales continued the growth seen in 2010 with a 1.6% rise to 22,366.
Its figures show there is still £343m of untapped funds available that people have not yet drawdown.
Home and garden improvements remained the most popular use of equity release, followed by repaying unsecured debt.
Wales experienced the largest growth in equity release sales, up 24% in plan numbers and 32% in lending. The largest percentage decline in plan numbers was in the North-West and for value Northern Ireland, down 28%.
There has also been a marked increase in the number of people using equity release for gifting. Those gifting money to family members has increased from 19% to 23%.