More Brits releasing equity from homes

The number of Britons releasing equity from their homes to support themselves in retirement has continued to rise.

According to Safe Home Income Plans (Ship), which represents 90 per cent of the UK's equity release industry, some £295 million was released from British homes in the last three months alone.

This was a significant increase compared with earlier this year, but only slightly more than in the same period last year.

"The latest figures show how the equity release market continues to increase in popularity," said Ship chief executive Jon King.

"The continued popularity of flexible drawdown products has resulted in a healthy rise in the number of cases.

"If the number of new cases continues to grow at this rate we could be set for a record year for new business."

There are two main forms of equity release products for older homeowners.

Lifetime mortgages and home reversion plans.

With a lifetime mortgage older homeowners can borrow against the value of their home, with the interest payments deferred until they die or move into care and their home is sold.

Home reversion plans offer consumers the chance to access some of the value of their homes by selling some or all of their property to a third party. The percentage of the property they sell reverts to the lender when they die or move into permanent care and the home is sold.

Money released in either case can be taken as a lump sum or used to buy an annuity providing an ongoing income for the life of the homeowner.

No payments are due by the person releasing the equity, and they can continue to live in their home for as long as they like.

Compared with last year the number of lifetime mortgages sold has increased only slightly (£600,000 across the UK), while the amount of equity released through home reversion schemes has jumped £18.2 million. XXX