Brits Use Home Equity for Dream Holidays Despite Economic Uncertainty

An increasing number of older UK homeowners are turning to lifetime mortgages to fund their dream holidays, despite the ongoing economic challenges.

Recent data from Pure Retirement, a leading “later life” lender, reveals a fascinating snapshot of how people are utilising lifetime mortgages today. These mortgages, typically used by older homeowners, allow them to release equity from their homes while continuing to live there.

Home Improvements Lead the Way

25% of new customers have used the released funds for home improvements. This marks a 3% increase from the third quarter of 2023 and a 2% rise from the fourth quarter of 2022. This trend suggests a growing desire among homeowners to invest in their current properties, likely influenced by the fluctuating property and mortgage rates over the past year.

Debt Repayment Remains a Key Factor

Debt and mortgage repayments are still a major reason for taking out lifetime mortgages, with 23% of applicants citing this as their primary motivation. The figures are fairly consistent, showing only a slight 1% increase from the previous quarter and a 1% decrease year-on-year.

Holidays Becoming a Popular Choice

Interestingly, holidays have emerged as the third most popular reason for taking out these loans. One in 10 new applicants (10%) are using their advances to fund new experiences, a rise from the fourth position both quarter-on-quarter and year-on-year.

Gifting and purchasing new cars also feature in the top five reasons for taking out a lifetime mortgage, each accounting for 10% and 9% of loans, respectively. The trend in gifting has slightly declined, while car purchases have remained steady.

Among those opting for lumpsum plans, the primary reason for taking out a lifetime mortgage is debt and mortgage repayment, accounting for 29% of the applications. This reflects a 2% increase from the previous quarter and a 1% rise year-on-year.

Home improvements are the second most common reason, with nearly one in four lumpsum applicants (23%) choosing this option. Gifting ranks third at 11%, followed by car purchases at 9%, showing an increase in both areas.

CEO’s Insights

Paul Carter, CEO of Pure Retirement, commented “It’s gratifying to see the diverse range of uses that the modern lifetime mortgage applicant is using their home’s equity to fund, which has undoubtedly contributed to the sector’s ongoing resilience. Whether it’s for debt repayment to give them greater future financial freedoms, helping their families, or achieving aspirations such as home improvements, cars and holidays, these latest figures highlight the ways that those in later life are taking advantage of their assets to achieve their – or their loved ones’ – financial goals in later life.”