Fewer customers use lifetime mortgages to clear housing debt
Spending on home improvements continued to be the dominant reason for unlocking housing equity in 2025, according to new figures from Legal & General (L&G) Home Finance. Half of new lifetime mortgage customers used at least part of the funds to reinvest in their property.
By contrast, the share of new borrowers drawing on equity release to repay existing mortgage balances fell to 20% last year, down from nearly a third (31%) in 2024.
Use of lifetime mortgages to consolidate unsecured debt such as personal loans and credit card borrowing also edged lower, slipping from 24% to 23%.
Meanwhile, more customers ringfenced cash for contingencies. Almost a quarter (24%) of new lifetime mortgage borrowers set aside an emergency fund in 2025, up from 22% the previous year.
For customers making further drawdowns on existing plans, home improvement again topped the list of uses, accounting for 51% of additional advances. Everyday living costs were the second most common reason, cited in 24% of drawdowns.
L&G’s findings follow Equity Release Council figures published earlier this week, which showed the overall equity release market grew by 11% in 2025. The trade body’s data underlines the increasing role of housing wealth in retirement funding and later-life financial planning.
“Property wealth can play an important role in supporting people’s retirement income and helping them meet their long-term goals,” said Lorna Shah (pictured right), managing director, retail retirement at L&G. “Our latest data highlights that home improvements remain the most popular use for equity release, while fewer customers are paying off mortgage debts with the equity they have in their home.
“As a lender, we work closely with advisers and the broader industry to ensure that people looking to access property wealth make informed choices, and give proper consideration to all of the options available to them.”
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