The report found that other things the loans are used for include purchasing a new property and helping first-time buyers.
A third of people surveyed in Canada Life’s 2018 Retirement Sentiment Index said they were concerned about cost of living and believed they would need over £1,400 a month to cover expenses.
Analysis of the 2018 data shows that 21 per cent of lifetime mortgages taken out by Canada Life customers were partly or solely used for daily living expenses. This shows growth of five per cent against 2017.
Alice Watson, head of marketing and communications at Canada Life Home Finance, said that the growth in customers using lifetime mortgages as income during their retirement reflects the extent to which equity release is now viewed as a practical option for retirement planning.
She added: “This sits alongside the dramatic changes brought in under the pension freedoms, which made pensions far more efficient as a wealth vehicle in inheritance planning.
“Thanks to the freedoms, pensions passed on are now taxed at the marginal income tax rate of the heir receiving them, tax-deferred if the heir keeps it in a pension rather than drawing on it, or aren’t taxed at all if the benefactor dies before 75. Drawing less on a pension, and instead drawing on other assets to fund retirement, could allow someone to leave more money to their loved ones.”
“One of the drivers behind this increasingly diverse and everyday use of equity release is product innovation. The challenge now for the equity release industry is to continue to adapt to changing customer needs and ensure the requirements of future generations of homeowners are catered to.”