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How do I compare equity release plans?

Comparing equity release plans can feel overwhelming, but breaking the process into clear steps helps you find the right plan for your circumstances. Here is how to get started.

1. Step 1. Check your eligibility: You typically need to be aged 55 or over and own a UK property worth at least 70,000 pounds. The amount you can release depends on your age, property value, and health.
2. Step 2. Understand the different plan types: Lifetime mortgages let you borrow against your home while retaining ownership, and they account for over 99% of equity release plans taken out in the UK. Home reversion plans involve selling a share of your property. Each type works differently, so understanding the differences is essential before making a decision.
3. Step 3. Compare interest rates and features: Equity release interest rates vary between providers, so comparing like-for-like is essential. Look at the annual equivalent rate (AER), whether rates are fixed or variable, and features such as drawdown facilities or voluntary repayment options.
4. Step 4. Speak to a qualified advisor: Equity release advice is a legal requirement in the UK. A qualified advisor will assess your full financial picture, explain how each plan affects your estate, and recommend the most suitable option for your needs.
5. Step 5. Review the illustration and apply: Your advisor will provide a Key Facts Illustration (KFI) showing exactly what the plan will cost over time, including projected interest growth and the estimated remaining equity. Review this carefully before proceeding with your application.

What kind of equity release do I need?

The right type of equity release depends on your financial goals, how you want to receive the money, and what matters most to you when it comes to protecting your estate. Here are the most common situations and which plan suits each one.

You want a large lump sum

If you need a significant amount of cash in one go, perhaps to pay off an existing mortgage, clear debts, or help family members, a lump sum lifetime mortgage is the most straightforward option. You receive the full amount upfront, and interest is charged on the total from day one. This works best when you have a specific, immediate use for the money.

You want to draw money as needed

If you prefer flexibility, a drawdown lifetime mortgage lets you take an initial sum and then withdraw further amounts when you need them. Because interest only accrues on the money you have actually taken, this can significantly reduce the total cost over time. Drawdown plans are ideal if you want a financial safety net rather than a single large payment.

You want to fund home improvements

Many homeowners use equity release to renovate or adapt their homes for later life. Whether you are adding a ground-floor bathroom, extending your kitchen, or making accessibility improvements, a drawdown plan lets you access funds as each stage of work is completed. Read our guide on using equity release for home improvements for more detail on how this works.

You want to pay off your mortgage

If you still have a residential mortgage, equity release can be used to repay it and eliminate your monthly payments. This is one of the most common reasons people take out equity release plans. Our guide on using equity release to pay off your mortgage explains the process step by step, including how much you could save each month.

You want to protect an inheritance

Some plans let you ring-fence a percentage of your property value as a guaranteed inheritance for your beneficiaries. This gives you access to cash now while ensuring your family receives a minimum amount when the property is eventually sold. You can learn more about how this works in our equity release and inheritance tax guide.

You are not sure equity release is right for you

Equity release is not the only way to access cash in later life. Downsizing, retirement interest-only mortgages, and other financial products may be more suitable depending on your circumstances. Our equity release alternatives guide covers all the options available to you, helping you make an informed decision.

What types of equity release are there?

There are two main categories of equity release: lifetime mortgages and home reversion plans. Within lifetime mortgages, several variations exist to suit different financial needs and preferences. Here is how they compare.

What fees might I have to pay for equity release?

Equity release involves several costs beyond the interest rate on your plan. Understanding these fees upfront helps you budget accurately and avoid unexpected charges during the process. Here are the typical costs you should expect.

How much can I release from my home?

The amount you can release through equity release depends on several factors, and lenders use a combination of these to calculate your maximum borrowing. Most homeowners can release between 20% and 60% of their property value, with older applicants typically able to access more.

• Your age: The older you are, the more you can typically release. A 55-year-old might access around 20% to 30% of their property value, while someone aged 80 or over could release up to 50% or more.
• Your property value: Lenders require a minimum property value, usually around 70,000 pounds. Higher-value properties allow you to release larger sums, though maximum lending limits apply.
• Your health and lifestyle: If you have certain medical conditions, smoke, or have a high BMI, you may qualify for an enhanced plan that lets you release more money or secure a lower interest rate. Common qualifying conditions include diabetes, high blood pressure, and heart conditions.
• Your property type and condition: Standard construction properties in good condition are preferred by lenders. Non-standard builds, properties above commercial premises, or homes in poor repair may reduce the amount available or limit your choice of providers.
• Your existing mortgage balance: If you have an outstanding mortgage, this must be repaid from the equity release funds first. The remaining amount after repayment is what you receive as cash.
• Inheritance protection: If you choose to ring-fence a portion of your property value for beneficiaries, this reduces the maximum amount you can release. The more you protect, the less you can access.

How can I get a better equity release deal?

Small decisions can make a big difference to the total cost of equity release over time. These five tips will help you secure the best possible plan for your circumstances and protect more of your property value for the future.

1. Consider drawdown over lump sum: If you do not need all the money at once, a drawdown plan lets you take funds as and when you need them. Because interest only compounds on money you have actually withdrawn, this approach can save tens of thousands of pounds over the life of the plan compared to borrowing everything upfront.
2. Make voluntary repayments: Many lifetime mortgages now allow you to repay up to 10% of the original loan amount each year without penalty. Even small regular payments can dramatically reduce the total interest you pay, helping to preserve more equity in your home for your beneficiaries.
3. Check if you qualify for an enhanced plan: Health conditions, lifestyle factors such as smoking, and even certain medications can qualify you for enhanced terms. This could mean a lower interest rate or the ability to release more money from your property, so always disclose your full medical history to your advisor.
4. Compare across the whole market: Interest rates vary significantly between equity release providers. A difference of just 0.5% in your rate could save you thousands of pounds over the lifetime of the plan, so whole-of-market advice from an independent advisor is essential.
5. Think carefully about inheritance protection: Ring-fencing a percentage of your home for beneficiaries provides valuable peace of mind, but it reduces the amount you can access now. Work with your advisor to find the right balance between meeting your financial needs today and preserving wealth for the future.

How does equity release work?

Equity release lets you access the wealth tied up in your home without having to sell it or move out. The process involves several stages, and understanding each one helps you feel confident and in control throughout. Here is how it works from start to finish.

Initial consultation: You speak with a qualified equity release advisor who assesses your financial situation, explains the options available to you, and helps you decide whether equity release is suitable. This initial consultation is typically free and comes with no obligation to proceed.

Property valuation: An independent surveyor values your property on behalf of the lender. This determines how much you can borrow and forms the basis of your plan illustration. The valuation usually takes place within a few days of your application.

Recommendation and illustration: Your advisor recommends a specific plan and provides a Key Facts Illustration (KFI). This document shows the interest rate, the projected growth of the debt over 5, 10, 15, and 20 years, and the estimated amount remaining from your property after the plan ends.

Legal process: A specialist equity release solicitor handles the legal work, including reviewing the plan terms, conducting property searches, and ensuring you fully understand the implications. You will receive independent legal advice before signing any documents.

Funds released: Once all legal and administrative work is complete, the funds are released to your solicitor and then transferred to you. If you have an existing mortgage, it is repaid first from the proceeds, and the remaining balance is yours to use. The whole process typically takes 6 to 10 weeks from your first appointment.

Repayment: You do not need to make any mandatory repayments on most lifetime mortgages. The loan, plus accumulated interest, is repaid when the last borrower dies or moves into long-term care, and the property is sold. All plans arranged through the Equity Release Council come with a no negative equity guarantee, meaning you will never owe more than your home is worth.