More over-55s tap homes for retirement, borrowing £113,779 on average

By ED MAGNUS, SENIOR THIS IS MONEY REPORTER The number of Britons tapping their homes for cash is on the rise, according to the latest figures from industry body the Equity Release Council. It revealed that between April and June, the number of people borrowing via equity release rose by 4 per cent to 13,489. This included new customers, people with existing equity release loans taking further borrowing, and customers with drawdown equity release plans withdrawing money from their pots.   Total lending also increased to £597million, up 4 per cent on the £574million lent during the previous three months.  The strongest growth came from new customers, with 5,307 homeowners accessing housing wealth for the first time, a 9 per cent increase on the previous three months. However, the amount of cash individuals released from their homes fell in some cases. Average new lump sum borrowing fell 6 per cent over the three months with the typical borrower taking £113,779. Initial drawdown borrowing increased 2 per cent to £63,642. Existing customers also remained active between April and June. Further advance customer numbers rose by 12 per cent to 1,204, while returning drawdown customer numbers remained broadly flat. Between April and June, the number of people borrowing via equity release rose by 4 per cent Equity release can help older homeowners access wealth tied up in their homes without needing to sell or move. The loan only needs to be repaid when they die or go into long-term care.  However, because interest rolls up on the loans over time, the borrowing can be expensive especially for those who live well into old age.  It also impacts the ability of older homeowners to leave an inheritance.  Jim Boyd, chief executive officer of the Equity Release Council, said: 'It is encouraging to see this increase in activity despite the inherent challenge of continuing domestic and international uncertainty.' 'New customer numbers have recovered to the same level as a year ago, while overall lending and customer activity have both increased over the quarter. 'The FCA recently described later life lending as a fourth pillar alongside pensions, savings and investments.  'Today’s figures suggest that transition is already underway. As retirement funding becomes increasingly dependent on a mix of assets, housing wealth is becoming a more mainstream part of financial planning, supported by stronger consumer protections, greater product flexibility and high-quality advice.' Lifetime mortgages account for more than 99 per cent of the market, according to the Equity Release Council. These allow homeowners aged 55 and over to get a loan secured on their home, while still remaining the sole owner. They can use the money for home improvements, or anything they like. If they still have a mortgage on their home when they take out the equity release loan, they must use the loan to pay off their mortgage in full first. Homeowners can opt for a drawdown lifetime mortgage or a lump sum lifetime mortgage. Drawdown equity release mortgages allow people to take cash out of their home as and when they need, rather than in a single lump sum. Lump sum equity release mortgages allow people to access all of the cash from their home in one go. Equity release also allows homeowners to avoid having to make monthly payments, unless they choose to, as the entire balance can be repaid when the home is sold. If they choose to make no interest repayments the unpaid interest is added to the loan, meaning the size of the loan will increase over time. Mortgage rates have shot up again due to inflation triggered by the conflict with Iran reversing hopes that the Bank of England would cut rates. This means those remortgaging or buying a home face higher costs. That makes it even more important to search out the best possible rate for you and get good mortgage advice, whether you are a first-time buyer, home owner or buy-to-let landlord. This is Money's partner L&C can help you with its fee-free mortgage service. > Find the right mortgage for you  To help our readers find the best mortgage, This is Money has partnered with the UK's leading fee-free broker L&C. This is Money and L&C's mortgage calculator can let you compare deals to see which ones suit your home's value and level of deposit. You can compare fixed rate lengths, from two-year fixes, to five-year fixes and ten-year fixes. If you’re ready to find your next mortgage, why not use This is Money and L&C’s online Mortgage Finder. It will search 1,000’s of deals from more than 90 different lenders to discover the best deal for you. > Find your best mortgage deal with This is Money and L&C  Mortgage service provided by London & Country Mortgages (L&C), which is authorised and regulated by the Financial Conduct Authority (registered number: 143002). The FCA does not regulate most Buy to Let mortgages. 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