Subject to Financial Conduct Authority approval L&G will become the sole funder of Newlife’s lifetime mortgages.
Bernie Hickman, managing director of Legal & General’s individual retirement business, said: “We are delighted to announce our acquisition of Newlife and our entry into the lifetime mortgage market.
“Over 60s in the UK have nearly £1.3 trillion in housing equity and we believe lifetime mortgages will become an increasingly popular way for many people to supplement their retirement income.
“Legal & General’s acquisition of Newlife allows us to participate fully in this market, which we believe has huge potential.
“With close to £40bn of annuity assets, we have considerable capacity to provide future funding in this growing market.”
Newlife, which was founded in 2003, offers standard, flexible lump sum and second home lifetime mortgages.
Nigel Waterson, chairman of the Equity Release Council, said: “We look forward to welcoming Legal & General to the equity release market following its acquisition of Newlife, which is itself a valued and longstanding provider member of The Council.
“It is no secret that some major high street names have been considering a move into equity release, which will give the sector an additional boost following a record £1.4bn of lending activity last year.
“There is great potential for equity release to help ever more people to find financial comfort in retirement."
He added: “Legal & General’s recent report on the UK housing crisis called for more big lenders and institutions to join the market, and its decision to take the initiative is another significant milestone in the growth of equity release.
“We anticipate that Legal & General will provide valuable support alongside our existing members to build the profile of equity release, as well as extending consumer choice and protection.”