Buying a new car is one of the main reasons older people take out a lifetime mortgage, according to Norwich Union Equity Release Ltd.

More than £1.1 billion was released from older people’s homes in 2003. With new car registrations due on 1 September, figures from Norwich Union show that more than a quarter (28%) of people releasing equity from their home plan to spend at least some of the money on a new car.

With 20% of the UK population aged over 60, more older people are driving. There are two million drivers in the UK aged over 70 and over the last 30 years, the largest increase in active driving licence holders has been among older women. There was a 600% increase in female drivers over 65, and a 200% increase in male drivers over 65 compared to a 29% increase in both male and female drivers aged 17-59.

Mark Kelly, director of Norwich Union Personal Finance Ltd, said: "Having a car is the key to independence for many people. However, buying a new car can be a huge financial burden for older or retired people and we have found that many of our customers use a lifetime mortgage to buy a car that they will be able to enjoy for years."

In a cautionary note Mr Kelly added: "Taking out a lifetime mortgage is a big decision to undertake and homeowners must ensure that they feel confident that they will be making the best of their money, however they choose to spend it."