Retirees turn their properties into cash machines to give money to family members

Older people have turned to equity release in record numbers to support their cash-strapped families through the cost of living crisis.

A record number of homeowners aged over 55 chose to draw cash from the value of their home in the last three months, according to the Equity Release Council, the industry trade body

Between July and September, 13,452 plans were taken out by older homeowners – an increase of 8pc from the previous three months. Total lending to new and returning customers grew by 49pc compared to last year, the trade body added.

Equity release, also known as a lifetime mortgage, allows homeowners to use their properties like cash machines. Homeowners take out a loan that is repaid whenever the owner dies or goes into long-term care.

These deals are popular with wealthy homeowners, said David Forsdyke of Knight Frank, a later life adviser.

“Some want to redistribute their wealth to their children and grandchildren, others are using the property as a way to top up their income, and yet others are using the loan to restructure their finances in preparation for retirement,” he said. “It is no longer a last resort.”

Those choosing to take a cash “lump sum” from their home took an average value of £133,770, while new “drawdown” averaged £88,340 for the initial withdrawal, the council said.

David Burrowes, of the Equity Release Council, said homeowners were increasingly inclined to “put their property wealth to work” in later life as a means of supporting themselves and family.

Total lending had surpassed last year’s record of £4.8bn despite rising interest rates – and the last three months of 2022 will be the “busiest period of the year”, according to retirement specialist Just Group.

Stephen Lowe, of the group, said: “These figures highlight the increasing appetite for people to make use of the wealth stored in their homes to meet their lifestyle aspirations whether they are seeking to help their families, generate extra retirement income, or pass on lump sums as part of an inheritance planning strategy.”