Majority of retirees unaware of equity release tax benefits

The research revealed that 55% didn’t know the lump sum was tax free, rising to 64% of those aged 55-65.

And despite the fact that three in ten would consider taking out an equity release loan if they needed a cash lump sum, just 11% fully understand all equity release product features.

52% didn’t realise you can still move home if you take out equity release and 65% didn’t know you could take out equity release even if you still have a mortgage.

Although downsizing also offers a solution, two thirds of over 55s said they don’t want to move, rising to 71% for those aged 70 and over.

Simon Stanney, equity release service director at SunLife, said: “Three in ten over 55s would consider equity release, and it is possible that many more would too if they understood the product properly.

“But we are in a situation where over half of homeowners age 55 and over think the cash sum would be taxed, that they would be stuck in the same home if they did equity release and that it is not possible to do equity release if you still have a mortgage – which 18% of over 55s do.

“Our research shows that one in five over 55s say they feel worse off, financially, than they expected to be at their age. However, many have got a lot of equity tied up in their homes.

“This is a generation that are generally property rich and cash poor due to healthy increase in the value of their homes, but inflation eating away at pension pots and increased living costs. But 62% of those surveyed said they categorically did not want to downsize, which means the solution for the majority could be to unlock some of the value in their homes via equity release.”