Canada Life reveal 1 in 5 use equity release to cover daily living expenses

Figures from Canada Life Home Finance reveal that 1 in 51 equity release customers take out loans to bolster their day-to-day retirement finances. The findings underscore the growing use of the loans to fulfill retirement plans, especially as a third of people surveyed in our 2018 Retirement Sentiment Index said they were concerned about cost of living and believed they would need over £1,400 a month to cover expenses2.

Analysis of the 2018 data shows that 21% of lifetime mortgages taken out by Canada life customers were partly or solely used for daily living expenses. This is a 5% growth compared to data gathered in 2017 and is part of the overall upward trend in the equity release sector. Figures from the Equity Release Council showed a record of 82,000 homeowners taking advantage of equity release in 2018 – an increase of 24% since 2017.

Alice Watson, Head of Marketing and Communications at Canada Life Home Finance, said:

“The growth in customers using lifetime mortgages as income during their retirement reflects the extent to which equity release is now viewed as a practical option for retirement planning. Alongside more traditional sources of income such as pensions and other savings or investments, the use of property wealth is helping to boost the quality of retirement for increasing numbers of people.

“This sits alongside the dramatic changes brought in under the pension freedoms, which made pensions far more efficient as a wealth vehicle in inheritance planning. Thanks to the freedoms, pensions passed on are now taxed at the marginal income tax rate of the heir receiving them, tax-deferred if the heir keeps it in a pension rather than drawing on it, or aren’t taxed at all if the benefactor dies before 75. Drawing less on a pension, and instead drawing on other assets to fund retirement, could allow someone to leave more money to their loved ones.”

The most popular reasons for Canada Life Home Finance customers taking out a lifetime mortgage are to make improvements to their home or garden (47.5%) and to clear an existing mortgage (37.9%). Other things the loans are used for include purchasing a new property and helping first time buyers.

Alice Watson at Canada Life Home Finance added:

“The driver behind this increasingly diverse and everyday use of equity release is product innovation. The challenge now for the equity release industry is to continue to adapt to changing customer needs, and ensure the requirements of future generations of homeowners are catered to.”


1 Canada Life Reasons for Loans data 2018

2 Canada Life Retirement Sentiment Index 2018