Over-55s withdraw £11m a day with equity release

Homeowners aged 55 and over raised a record £1billion through equity release between July and september – £11million a day, figures show.

The quarterly figure is up 24 per cent on a year ago. The money was ‘withdrawn’ from the value of homes to pay for items such as care, home improvements and helping children get on the property ladder. Under equity release, property owners can take out a mortgage to release cash from their homes. Interest is payable and the loans do not have to be repaid until they die or go into care when the house can be sold.

There is also a home reversion option where people can sell part or all of their property in return for a lump sum or regular payments, but can live in the home rentfree. Jim Boyd, of the equity release Council, which published the figures, said: ‘There is often an assumption that care homes are the only option for people in later life.

‘But equity release provides a way for home owners to access what is often their largest asset and continue living at home for longer, even as their care needs change.’ However, former pensions minister Baroness ros Altman said it was ‘worrying’ to see so many people having to rely on equity release to fund care. she warned: ‘Taking out an equity release loan can be very expensive.’

The average fixed rate on an equity release mortgage is 5.11 per cent this month, according to the moneyfacts website.

That is substantially higher than traditional high street mortgages.