My parents took out a plan a few years ago when they were equity rich but cash poor, with little more than a state pension and a decent annuity (thank you, Alan Steel of Alan Steel Asset Management) to provide them with a monthly income.
A nice man from equity release specialist Key sorted out a plan for them, although I kept an eye on things from afar.
So, when dad died in May last year after a good innings, what brought financial reassurance at a time of overwhelming grief was that the annuity would keep paying out, albeit at a reduced rate (thank you again, Mr Steel).
And that because of the equity release, mum, in her early 80s, could keep on living in her tidy bungalow until such time that she needs to go into long-term care or she joins dad. By jove, she misses him.
Equity release has brought a degree of home comfort to the life of someone suffering great personal discomfort.Although mum occasionally moans about the cost of maintaining the home, I cannot envisage her anywhere else. She loves where she lives and there is a vast park on her doorstep where she can go and speak to her dog-walking friends.
Of course, I imagine there will be little left to inherit at the end of the day once the Aviva lifetime mortgage, now rolling up interest like an enormous sponge, has been paid off.
But I am chilled, as indeed I hope my three siblings are. Equity release has brought a degree of home comfort to the life of someone suffering great personal discomfort. That is not a bad result.
There was a time in the late 1980s and early 1990s when I would not have recommended anyone to take out an equity release plan. Those were the days of hare-brained investment-related schemes and products where the size of an outstanding loan could leave a horrible debt to be dealt with by children.
But the industry has come on leaps and bounds in recent years. The no negative-equity guarantee, meaning no one can now leave behind a loan higher than the value of their home, was the turning point.
But it is the drive towards making equity release more flexible – and consumer-friendly – that now makes it a financial product fit for purpose.
According to the Equity Release Council, the sector’s lobby group and overseer, product options are increasing all the time. Some 24 back in 2007, 58 two years ago and now 139.
The result is a range of products that now allows buyers to draw down money in stages (thereby mitigating interest costs), part-pay mortgage interest (again reducing the amount of interest being rolled up) and ring fence a slice of the home’s value so that it can be passed onto family and friends (so-called inheritance protection).
Lenders are also more accommodating over health issues that can result in more equity being released.
"Now is an exciting time for the later life market," said Dave Harris, chief executive of lender more2life, in response to an healthy uptake of new plans industrywide in the first half of the year – 28 per cent up on the same period last year.
"We are delighted to see that product innovation has been a key factor in the industry’s impressive growth. Equity release is in a prime position to help homeowners who require access to extra cash, whether they need it to repay borrowing such as interest-only mortgages, improve their standard of living in retirement, or help their families."
In the wake of Mr Harris’s words, Saga launched an innovative equity release product for the over 60s, enabling borrowers to make regular withdrawals from as little as £200 – but only after releasing an initial lump sum.
"We are delighted to be challenging the market," said Saga. "Our customers have consistently told us they want a solution that enables them to stay in the home they love, but to use it as a way of generating additional monthly money."
Dark clouds
So all hunky dory in the equity release sector? Not quite. For all its innovation and focus on providing consumers with greater flexibility, the sector has a dark cloud overhanging it.
It has been formed by concerns from the regulator, the Prudential Regulation Authority, that equity release players are not putting aside sufficient capital against lending – in case house prices fall and they are required to honour what could be expensive no-negative equity guarantees.
It wants to impose tighter capital rules, kicking in at the end of the year. Already, provider Just has decided not to pay shareholders a dividend just in case the regulator carries through on its threat.
I trust common sense prevails because this ageing property-rich country of ours needs a healthy, competitive and consumer-friendly equity release sector, working in tandem with a segment of the financial adviser market committed to delivering expert advice.
We need an industry looking constantly to innovate, not one having to go into shrink mode because of over-zealous, over-cautious regulatory intervention.
For once, I think my mum would agree with me.
Jeff Prestridge is personal finance editor of The Mail on Sunday
