The Daily Telegraph

Homes are now retirement cash machines

- By Katie Morley

USING the family home as a cash machine to fund retirement is becoming the “new normal” among older home owners, experts say.

The value of so-called “equity release” lending reached £824million in the past three months after rising by 44 per cent on the same period last year, according to the latest industry figures.

And yesterday Nationwide, Britain’s biggest mortgage lender, announced it would become the first major provider to offer equity release since the financial crisis. In recent years such policies have only been sold by specialist providers. Equity release, or “lifetime mortgages” lets home owners extract value from their property by borrowing against some or all of the equity in it.

Such loans are attractive because they are typically repaid only when the customer dies and the property is sold. Experts said that while the rise of equity release could reduce the amount of traditiona­l inheritanc­e, it could facilitate a rise in “living inheritanc­es” where relatives gift money while still alive. Nationwide said one in 10 people looking to take out a lifetime mortgage wanted to gift the money to family or friends.

However, the most common reason was to pay off an existing mortgage, suggesting that the boom was being fuelled by retirees wanting to increase their disposable income. Ray Boulger, a technical expert at John Charcol, said: “Lifetime mortgages are increasing­ly becoming the new normal, and with Nationwide now in the market they are well and truly in the mainstream.”

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