When asked if they could correctly identify if a series of statements about equity release were true or false, 89% of over 55s gave at least one incorrect answer, meaning just one in ten understand all the product features.
SunLife found that the biggest misconception about equity release is that you can only take out an equity release plan if you have paid off your mortgage.
Just 35% 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%) realised that you can still move house if you have an equity release plan in place.
Fewer than half (45%) knew that the cash lump sum released through equity release is tax-free – 44% said they didn’t know and 11% said they thought they would have to pay tax on the money released.
Sunlife equity release service director Simon Stanney said: “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. In response, we have created Exploring Equity Release - a series of blogs, articles and guides about equity release, to educate people about the features of equity release plans.”
SunLife’s tools How much has my house made me and Dream Shopping Basket can help homeowners work out how much equity they have in their homes and what they could do with the tax-free cash.
Stanney concludes: “Our equity release guide busts the myths and helps over 55s make an informed decision about whether equity release is the right option for them.”
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