Knight Frank has become the first estate agent to launch a service offering over-55s advice on equity release.
The estate agent's new 'specialist later life finance' team will be able to help the growing number of grandparents who a looking to generate cash from their homes to help their grandchildren.
David Forsdyke of Knight Frank Finance says the 'Bank of Grandma and Grandad' is helping to fuel the growth in equity release, as grandparents look to gift their grandchildren a sum of money to help them buy their first home.
He says: “We are seeing older people look to release equity from their primary residence for a number of reasons, including helping children financially, making home improvements and enhancing their quality of living, or to take the holiday of a lifetime.
“At the same time, we have seen a steady decline in pensions and savings, with retired people in the UK often finding themselves asset rich, but cash poor.”
Knight Frank says the newly-formed team will also offer advice for those who need to downsize or buy a retirement home.
Equity release boom
The UK equity release market is booming, recording its best year ever in 2018.
Over 80,000 homeowners unlocked £3.94 billion of property wealth in 2018, according to the Equity Release Council.
Drawdown lifetime mortgages were the most popular option, with 64% choosing this category, while 36% chose a lump sum lifetime mortgage.
The Equity Release Council says this boom has been driven by people aged 65 to 74 looking to fund home improvements, supplement retirement income and help out family and friends with their own house moves.
Separate figures from equity release provider Responsible Life show that homeowners released an average of £73,285 in the first three months of the year.
Data from Moneyfacts shows that equity release interest rates have dropped below 5% for the first time since records began.
The average equity release rate for fixed and variable rate mortgages now stands at 4.99%, down from 5.1% a year ago and 6.11% five years ago.
The choice of deals on the market has also increased, with 207 lifetime equity release deals available, up from 164 a year ago and 48 five years ago.
How equity release works
You can use equity release to gain access to the wealth tied up in your property without having to sell or move home. It is designed for older homeowners who own their property outright or have relatively small mortgages to pay.
Equity release has seen in rise in popularity in recent years, especially among pensioners who are struggling with expenses.
More and more older homeowners are also looking to unlock their property wealth to boost their retirement income or enhance their quality of life.
With equity release it is possible to borrow against the value of your home, sell it or part-exchange it for a lump sum or a regular monthly income.
A lifetime mortgage is a long-term loan which you can use to extract your funds in a single lump sum or in smaller amounts over time through what is known as drawdown. Home reversion plans allow you to access all or part of the value of your property while retaining the right to remain in it rent free.
However, while equity release may seem like a great way of unlocking cash from your home it can be expensive. If you take out a lifetime mortgage you will normally be charged a higher rate of interest than you would on an ordinary mortgage, which means your debt can grow quickly if the interest is rolled up.