Most people who are considering taking out an equity release plan think they will use the money to boost their income but what they actually use it for is home improvements.

This is according to research by SunLife, which found 55 per cent of people said they wanted extra income. However, for those who opted for equity release only 41 per cent used the money for this purpose.

The majority of equity release customers (60 per cent) used the cash on home improvements but for those who are thinking about releasing equity just 32 per cent said this.

The third most popular reason for using equity release was to buy a car (22 per cent) yet this was seventh on the list for those considering releasing equity (16 per cent).

SunLife’s Equity Release Report 2020 stated that 28 per cent of people thought they would use the money to supplement their pension but only 18 per cent cited this as a reason.

Holidays were important for 27 per cent of potential equity release customers and fourth on the list. But only 7 per cent said a holiday was the main reason they released equity and was joint bottom of the list along with clearing the mortgage.

However, using equity release to pay off a mortgage was considered by 17 per cent and sixth on the list.

Homeowners release £47k on average

SunLife’s research shows that the average amount released is £46,928.

On average, homeowners with an equity release plan paid £95,448 for their current home and it is now worth £206,458. This means they have made £111,010 and released 23 per cent of the home’s value.

SunLife equity release director Simon Stanney says: “While home improvements and income boosting are the top two in terms of plans and reality, when we go further down the list, the two are quite different.

“Many over 55s are dreaming of holidays, but in reality, they are more likely to use the money for things like clearing debts, helping family and replacing their car.

“And while many people do use equity release cash to improve their lives, others are relying on it to maintain them.”

He adds: “Our research also reveals that one in four over 55s say they are worse off than they thought they’d be at this stage of life and are concerned they will run out of money before they die, so it is perhaps no surprise that many are turning to equity release to supplement their income and clear debts because their financial situation is not as secure as they hoped it would be.”