Buying a new or second property is the fifth most common reason that people release equity from their home, according to analysis of six months’ internal data by Equity Release Supermarket.

Repaying a mortgage is the number one reason that over-55s have released equity over the last six months, according to the data. On average, 21.1% of completed cases planned to pay off an existing mortgage with the money released.

Home improvements are the second most common reason for equity release, with an average of 17.9% of borrowers raising money for a renovation project. Debt consolidation is the third most common reason, followed by supplementing income.

The data also revealed that gifting money is becoming an increasingly popular reason to release equity. In the last four months alone, gifting money that has been released through an equity release scheme has risen by 2%.

Monetary gifts from equity release are sometimes used by over 55s to help younger members of their family get on the property ladder.

Mark Gregory, CEO and founder of Equity Release Supermarket, commented: “It is interesting to see that gifting money through equity release has risen over the last six months. Money gifted through equity release becomes exempt from inheritance tax, provided that the gift giver lives for seven years afterwards. 

“Inheritance tax can significantly reduce the amount of wealth that you may be able to pass on, so we often find that many people turn to equity release as a strategy for reducing the impact it will have on an estate.”