Help your children buy a property with this tax-efficient plan


However, some lenders will allow borrowers to make monthly payments which effectively freeze the loan size. 

Ms Clapton said: “I am paying interest of £55 a month on the loan and would certainly recommend equity release, especially if you have family to help.” 

How much do equity release loans cost?

The equity release industry is still dogged by its poor historic reputation, earned thanks to salesmen peddling expensive and inflexible contracts which often left homeowners with little or no equity in their property.

The sector is now subject to stricter rules for advisers and all plans come with a “no negative equity” guarantee. This means borrowers will never owe more than the value of their home.

Other plans allow a chunk of the property’s value to be ringfenced and passed on as inheritance. Releasing equity can also reduce the value of an estate and so help minimise inheritance tax.

Dave Harris, of lender More2life, said: “Rising house prices and record levels of demand for housing have seen more people look to equity release as a viable solution for the dilemma of wanting to help the next generation but not necessarily having sufficient available liquid assets to make a real difference.”

The cost of lifetime mortgages have steadily fallen in recent years. Borrowers paid an average interest rate of 3.4pc last year, down from 5.79pc in 2015, according to figures obtained under a Freedom of Information request from the City watchdog, the Financial Conduct Authority, by mortgage broker Responsible Life. 

Even so, equity release will not be the right option for everyone. Borrowers could find it cheaper to take out a personal loan because of the high arrangement and legal fees charged. In Ms Clapton’s case she spent £2,000 on fees.

Although obtaining a loan in retirement is more difficult than for people of working age, retirees with stable pension income can still access loans from banks, which could work out cheaper than a lifetime mortgage, especially for smaller amounts.


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