Struggling over-60s cashing in on their homes

THOUSANDS of pensioners battling to pay bills and buy food have turned to equity release, writes Jon Coates.

More than 93,000 used this type of loan to unlock capital from their homes last year, a rise of 23 per cent on the previous 12 months.

Equity release allows pensioners tax-free lump sums without having to sell their homes until they die or enter care. It can also be used to gift up to £325,000 to children or grandchildren to help them buy a first home or start a business. It is free of inheritance tax as long as the parent or grandparent lives for seven years.

The loan is then repaid by their estate – plus interest accrued at a fixed rate, currently between 6.20 and 8.99 per cent. These loans never go into negative equity, so descendants will not inherit debt. The need for new ways to access finance was shown by an Office for National Statistics report which found almost 100,000 retirees returned to work last year due to the cost of living crisis.

An Age UK study revealed 22 per cent of pensioners had reduced or stopped spending on medications, while 15 per cent said they were skipping meals or expected to do so. With the population ageing and beginning to outnumber children, fewer are expected to retire comfortably.

The number of over-85s is set to double to 2.6 million over 20 years.

John Jeffery, of later-life lenders Senior Capital, said over-60s should explore equity release. Dennis Reed, of Silvervoices, said it is a one-off to cope with a crisis and called for the triple lock to be restored permanently to ensure pensioners can afford the cost of energy and food.

Reintroduced this year for the current parliament after being suspended in 2022, it raises state pensions in line with the highest of three measures each year.

‘There is more demand for this’