Just one in 10 people aged over 55 who are aware of equity release understand all its product features, according to research by SunLife.
When asked if they could correctly identify if a series of statements about equity release were true or false, 89 per cent of over 55s gave at least one incorrect answer.
SunLife found the biggest misunderstanding was around whether or not you can take out equity release if you still have a mortgage. Just 35 per cent of respondents correctly identified that you can release equity from your home, even if you still have an outstanding mortgage as long as you pay off the mortgage with the proceeds.
Fewer than half (48 per cent) realised that you can still move house if you have an equity release plan in place. A similar proportion (45 per cent) knew that the cash lump sum released through equity release is tax-free – 44 per cent said they didn’t know and 11 per cent said they thought they would have to pay tax on the money released.
Sunlife equity release service director Simon Stanney says: “It is easy to see why equity release is becoming a popular way for people to fund their retirement. The over 55s are a ‘cash poor, property rich’ generation, with five times as much money in their property as in their pensions. Our research reveals that two-thirds do not want to downsize, so equity release offers a solution.
“But unfortunately, many people are put off because they don’t fully understand the benefits of equity release.”