A new “Retirement Lifestyle Booster” mortgage offers to allow older homeowners to draw a fixed income from the value of their property.
The scheme, from Family Building Society, is unusual in that instead of a single lump sum, the property owners sign up to receiving a fixed income for up to a decade.
Interest is payable on the loan, and it is deducted from homeowner's monthly income.
There is also an option to take an initial lump sum at the start.
In theory, when you reach the end of the term, all the interest will have been paid, leaving the exact amount you borrowed as the final loan balance.
To pay this, you sell your house and move somewhere cheaper. The aim of the deal is to enhance pensioners' monthly income while they're still in their own properties and in need of extra cash. The assumption is that they will inevitably sell or downsize.
Reference: Connington, J. 2017. Money, Banking, Mortgages, The Telegraph.