Why equity release? Understanding client motivations in later life lending
21 February 2025
For financial advisers exploring equity release, understanding why clients consider it is just as important as knowing how the product works. Equity release, most commonly in the form of a lifetime mortgage, allows homeowners aged 55+ to unlock tax-free cash from their property while continuing to live in it, without mandatory repayments.
It is a regulated financial solution that can serve a variety of planning needs in later life, but it must be assessed in context: client goals, long-term affordability, and impact on estate planning.
Here’s an overview of the most common client motivations and how they fit into a wider advice conversation.
Repaying mortgages and debts
A growing number of clients enter retirement with outstanding mortgages or unsecured debts. Equity release can provide a one-off lump sum to repay these obligations, offering peace of mind and reducing monthly financial pressure.
Adviser angle: Lifetime mortgages remove the need for monthly repayments, but clients should understand the long-term cost of compound interest. Consider whether making optional payments could preserve more equity over time.
2. Supporting children and grandchildren
Intergenerational gifting is a key driver of equity release. Clients often want to provide a “living inheritance” to help children onto the property ladder or fund education costs.
Adviser angle: Equity release can support early wealth transfer, but advisers should consider implications for Inheritance Tax planning and means-tested benefits, especially if the client’s gifting intention is substantial.
3. Funding Home and Garden Improvements
Around 30% of equity release borrowers use funds to improve or adapt their homes. This might include installing accessible features, modernising outdated areas, or enhancing the garden for lifestyle enjoyment.
Adviser angle: Improvements can increase comfort and may add value to the property-but it's important to discuss return on investment and whether adaptations support aging-in-place strategies.
4. Facilitating a New Property Purchase
Few realise that equity release can be used to purchase a new home, often via a Lifetime Mortgage for Purchase. This is useful for clients wanting to relocate in retirement without tying up liquid assets.
Adviser angle: This can be a powerful solution for clients looking to “rightsize”-moving closer to family, accessing single-storey living, or relocating to a preferred area without stretching their cash reserves.
5. Supplementing Retirement Income
For those with limited pensions or savings, equity release offers a way to supplement income—either through a lump sum or drawdown facility, where funds are accessed as needed.
Adviser angle: Drawdown can help manage the accrual of interest and support retirement cashflow planning, especially when coordinating with pension income or deferring state benefits.
6. Fulfilling Lifestyle Goals
Clients don’t just use equity release for needs-they use it for wants. Whether it’s funding travel, a long-held hobby, or a once-in-a-lifetime experience, equity release can unlock aspirations that would otherwise be out of reach.
Adviser angle: These goals matter just as much as the practical ones. Helping clients live richly and purposefully in retirement should be a core part of your advice proposition.
7. Enabling Major Purchases
Some clients use equity release to fund large, one-off purchases such as a new car, home technology, or leisure equipment. These purchases may not be urgent, but they can improve lifestyle or mobility.
Adviser angle: When framed within the broader context of long-term affordability and estate impact, these choices can still be justified—especially if they support independence or wellbeing.
Suitability first: the role of the adviser
While equity release can unlock significant financial freedom, it is not suitable for everyone. As an adviser, your role is to assess:
- The client’s objectives and timeline
- Alternatives (e.g. downsizing, borrowing from family, selling assets)
- Impact on estate value and inheritance goals
- Eligibility for means-tested benefits
- Capacity and vulnerability considerations
- Regulatory requirements, including the need for a qualified adviser and independent legal advice
Conclusion: Empowering Later Life Decisions
Equity release can be a powerful tool in the financial adviser’s toolkit, offering clients a way to enjoy their retirement on their terms. Whether it’s clearing debt, helping family, or funding a better lifestyle, the flexibility of modern lifetime mortgages makes equity release more relevant than ever.
But suitability is key. As demand grows, so does the responsibility to ensure clients receive clear, tailored, and compliant advice that aligns with their long-term needs.
