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CML finds borrowers are swapping &#39expensive&#39 credit for equity release

Rising numbers of financially-aware borrowers are turning to mortgage equity release to boost their spending money, according to a report by the Council of Mortgage Lenders.

Although yet to hit the highs of the 1980s, the report indicates that equity withdrawal is fast regaining ground since it plummeted in popularity during the early 1990s.

A survey commissioned by the CML shows over 60 per cent of borrowers who withdraw equity from their property spend some or all of it in six months. Twenty per cent use the money to pay off debts.

Of those who spend the money, 76 per cent spend at least some of it on home improvements while 22 per cent buy new goods for their home.

Over 50 per cent of borrowers withdraw less than £15,000.

The CML says the findings show equity release is largely used to fund house-related expenditure but it believes those who pay off debt are trying to cut costs by swapping expensive credit for cheaper mortgage borrowing.

The report says: “New products seem geared to making equity withdrawal easier in terms of process and reduced transaction costs.”

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