Record numbers of people are releasing equity from their properties through mortgage-style schemes, according to Norwich Union, the biggest provider of equity release in the UK.

The number of equity release loans taken out through Norwich Union was 89% higher in the first quarter of 2003 than in the equivalent period in 2002. The volume of sales was a record for the company.

Mortgage-style equity release can work well for many pensioners because they can borrow a sizeable lump sum against the value in their homes, but no repayments are due until the borrower goes into long-term care or dies.

Of course, these options need to be very carefully explored by customers and their families. However, for thousands of people aged over 55 in the UK, equity release offers huge potential benefits.

Paul Stokes, head of marketing for Norwich Union Personal Finance, said:

"More and more people over 55 do not want to settle for having to go without. They are increasingly exploring equity release as a way of improving their quality of life.”

“The number of people opting for equity release rose dramatically in 2002, and this trend is continuing at a pace into 2003."

There has been a turnaround in the perception of equity release plans since they first became popular in the 1980s. At that time a lack of regulation and some mis-selling caused concerns.

However, today’s products are fundamentally different. They include safety features such as a no negative equity guarantee to protect customers from the pitfalls of the past.

Also, leading lenders such as Norwich Union belong to the watchdog and regulatory body SHIP to ensure high standards.

These factors – along with rising property prices, low interest rates/low return on savings, living longer and the need to fund inheritance tax – have caused the dramatic resurgence of interest in equity release.

Sales of equity release schemes doubled between 2000 and 2002 and the Council of Mortgage Lenders projects the UK market could rise to £50 billion by 2008.