According to their findings, two-fifths (41%) of equity released in the first half of 2020 was used to pay off debts. Over 40% of the total amount of new equity released (which equates to around £588million) was used to clear some form of borrowing with mortgages (53%) followed by credit cards (47%) and loans (36%) being the most common repayments made. While using income to repay borrowing can be a better approach in certain circumstances, this is not always possible for some over-55s who find that they either need to repay a significant and unaffordable lump sum –in the case of an interest-only mortgage – or are unable to pay much more than the interest on other borrowing. With 56% of equity release plans allowing ad-hoc capital repayments and 38% facilitating regular payments to service interest and so avoid costly roll-up, customers can find that they are better able to manage their borrowing through appropriate use of these flexible product features. While most people want to reach retirement debt free, this is simply not the case for everyone – especially those who have taken out interest-only mortgages and now often face finding a substantial lump sum to repay the balance. In H1, over £500million worth of borrowing was repaid using housing equity – allowing people to retire with confidence, without the burden of needing to make regular monthly payments or facing the prospect of having to sell their home. With equity release rates starting from under 2.5% and many products allowing ad-hoc capital repayments or ongoing interest repayments, these flexible plans allow people to proactively manage their borrowing and shore up their finances. Something that is arguably more important than ever given the current economic uncertainty. Engaging with equity releases may seem like a good option for those who want or need some extra money but there are some important factors that should be considered before action is taken. Equity release can be more expensive in comparison to ordinary mortgages. If a person takes out a lifetime mortgage, which according to the Money Advice Service is the most common route for equity releases, they’ll likely be charged a higher rate of interest than they would have been charged on an ordinary mortgage. It should also be noted that for lifetime mortgages, there is no fixed “term” or date by which people are expected to repay their loan. The rate of interest that will be charged on a lifetime mortgage will not change throughout the life of the contract. Additionally, home reversion plans are unlikely to award the applicant anything near to the true market value of the home when compared to selling the property on the market according to the Money Advice Service. For retirees with limited resources, applying for an equity release may not allow them to rely on their home for money or support in their later years.