Later life lending continues to play an important part in retirement planning, with many remaining receptive to using property wealth to help them achieve their financial goals.

The figures underline the importance of offering lifetime mortgages that cater for both aspirational and needs-based borrowing. According to our overall figures for Q2, the primary reason for taking out a lifetime mortgage is now evenly split between aspirational and needs-based borrowing (home improvements vs debt repayments) meaning that modern product offerings have to be able to fulfil the needs of a diverse customer base.

This is even more true when it comes to the split between lumpsum and drawdown customers, with those that opt for a lumpsum lifetime mortgage doing so for more needs-based when it comes to primary uses, and the latter for far more aspirational purposes.

Our overall loan purposes in Q2

Looking at the overall picture, home improvements and debt repayment are tied as the top primary reason for releasing funds among new lifetime mortgage customers.

Our latest findings show that 50% of those who took out new plans over the last quarter did so for one of those two reasons, split evenly at 25% each. While the proportion of people using equity release for home improvements has stayed constant on both a year-on-year and quarter-on-quarter basis, debt and mortgage repayment has seen a 4% quarter-on-quarter increase, and a 3% rise from the 22% seen in Q2 last year.

We’ve also continued to see holidays, gifting and car purchases round out the top five most popular reasons, with each representing around 9-10% apiece.

Were there differences between lumpsum and drawdown customers?

Among our drawdown customers, home improvements continue to be the primary reason for releasing funds, sitting at 27%. Debt and mortgage repayment, meanwhile, continue to remain the second-most popular reason though the 19% proportion represents a 6% reduction compared to the overall figures. Holidays remain the third-most popular use of funds among drawdown customers, with a 14% share.

Our lumpsum customers, in contrast, continue to use released funds for more needs-based reasons; debt and mortgage repayment is the most popular use among this particular customer segment and a 30% proportion representing a significant increase compared to overall figures. Establishing a contingency fund is also the fourth-most popular reason among this group, accounting for 8% of all new lumpsum customers in Q2.

Property value among applicants in Q2

In addition to loan usage figures, the widening later life lending audience is also perfectly illustrated by the breakdown of applicants’ house values. In Q2, 26% of our applications came from owners of properties of up to £250,000, while the bulk of activity (55%) continues to come from those with properties valued at between £250,000 and £549,000). At the wealthier end of the property value spectrum, nearly one in five (18%) of new plans in the last quarter came from owners of homes with a value of at least £550,000, with 5% of plans currently coming from those with properties valued at £1m and above.