More than half of new equity release customers plan to spend the funds on home improvements, according to new data.

In contrast, only a quarter are using these funds to supplement and support everyday living expenses amid the backdrop of high inflation.

This data, from Legal & General Home Finance, covers customers taking out a lifetime mortgage in the first three months of 2023. 

It shows that home improvements remain the most popular reason for releasing additional funds from a lifetime mortgage — cited by 54% of customers. L&G said that with energy bills rising sharply many of these will be to enhance a property’s energy efficiency, be it installing double glazed windows, improving insulation or replacing boilers.

The data shows that Legal & General Home Finance customers typically release cash sums equivalent to 24% of their property’s value. With ONS figures showing the average property in England was priced at £310,000 in January 2023, this indicates customers are releasing an average of £74,400 via a lifetime mortgage.

The new application data shows that after home improvements, paying off an existing mortgage is one of the most popular uses of funds — cited by 23% of customers. Recent Equity Release Council data shows that total mortgage debt hit a high of £1.6 trillion in December last year.

The data shows a significant, and consistent, number of people are using funds to make gifts to family and friends — with this being cited on 9% of new applications. Legal & General said this is often to support younger generations, with monies being used to contribute towards a deposit on a first home or pay for big one-off expenses such as weddings. 

New applications from potential Legal & General customers indicate that people are increasingly looking to take out a lifetime mortgage for gifting purposes (13%), a trend expected to continue in the near future.

Legal & General Home Finance CEO Craig Brown says: “For those nearing or at retirement, accessing wealth tied up in the home can play a significant part of later-life planning and for many people, property is their most substantial asset, even with recent challenges in the market.

“Our data shows lifetime mortgages are playing an important role in long term financial planning and that making a home comfortable and sustainable in the long term continues to be a popular use for funds. 

“We also know that many people see releasing equity from their property as a way to provide a ‘living inheritance,’ with the opportunity to see loved ones benefit from the money when they need it most.”