Equity release specialist advice firm Responsible Life is set to launch its own equity release product, after gaining Financial Conduct Authority approval.
The Plymouth-based firm has created a new sister company, Responsible Lending, to provide the products, which will be on the market from June this year.
The launch will coincide with an expected surge in demand for equity release, as the first big wave of interest-only mortgages reach maturity.
The new company will be headed up by Keith Haggart, the former director of lifetime mortgages at Just Retirement (now Just) and, prior to that, managing director of lifetime mortgages at Prudential.
He is also a former director of Safe Home Income Plans, now the Equity Release Council.
Announcing its launch today (29 March), the new firm revealed it would be targeting three types of customers, all over the age of 55.
They included defined contribution pensioners looking to supplement their retirement income; "mortgage prisoners" who were "trapped in the wrong mortgage" as a result of Mortgage Market Review changes; and traditional customers simply looking to unlock growing property wealth.
Mr Haggart said recent "regulation swings" - in particular former chancellor George Osborne's freedom and choice reforms - had made conditions "tougher than ever" for those later in life.
"Legislating for more pension freedoms was the right thing to do but it has left many wary of running out of money in retirement," he said.
"This fear has affected lifestyles alongside savings and spending habits. If pension freedoms weren’t difficult enough to manage in retirement, there is the added complication of many requiring a mortgage into later life."
He said the mortgage market had "some fundamental flaws" in its approach to customers in retirement, flaws he said the new company was seeking to address.
The 2017 to 2018 tax year, beginning on 6 April next week, is expected to see a boost in demand for equity release from people who were sold interest-only mortgages in the 1990s.
With hefty principal sums to pay back, thousands of homeowners will be faced with a choice between downsizing or releasing equity - a fact that led one provider to predict demand to double.
Jon Greer, pension expert at Old Mutual Wealth, agreed that equity release would be the only option for many retirees.
"There are a lot of people who seem to be thinking, 'I'm going to rely on downsizing to fund my retirement.' But what we're actually seeing is that [downsizing] is not going to be a silver bullet."
He said problems with availability of suitable housing in the right area meant downsizing often failed to produce the capital many retirees were expecting.
"Equity release will become more mainstream going forward," he said, adding many people would simply not have an alternative.