Buying a Home
Remortgaging
Landlord
Specialist
Secured Loans
Debt Consolidation
Conveyancing
Finding a Solicitor
Equity Release
Equity release lets homeowners aged 55 and over access money from their home without selling it or moving out. This guide explains how it works, what it costs, and the risks to weigh up before you decide, in plain English.
Equity release is a way for homeowners aged 55 and over to access money that's tied up in their home, without having to sell it or move out. The most common form is a lifetime mortgage, where you borrow against the value of your property and the loan, plus any interest, is normally repaid from the sale of your home when you die or move into long-term care.
Equity release is a long-term financial commitment that reduces the value of your estate. It isn't right for everyone, and independent legal advice is a requirement before any plan completes.
What is equity release? In short, it's a way to borrow against the value of your home while continuing to live in it. Unlike a standard mortgage, most plans don't require monthly repayments - interest is added to the loan each year and the whole amount is repaid in one go, usually from the sale of the property after you die or move into permanent long-term care.
The process follows a fairly predictable sequence, from your first enquiry through to the funds landing in your account:
From that point, the loan runs quietly in the background. Interest is added to the amount you owe, unless you choose to make voluntary repayments, and the balance is repaid when the property is eventually sold. For a complete overview of every stage, product type, and cost, visit our equity release hub.
A lifetime mortgage is the most common type of equity release, accounting for the vast majority of plans arranged in the UK. You take out a loan secured against your home while retaining full ownership. Interest is charged on the amount you borrow and is normally added to the loan rather than paid monthly, so the balance grows over time - this is known as "roll-up" interest.
Most lifetime mortgages let you choose how you receive the money: as a single lump sum, in smaller amounts as you need them through a drawdown facility, or a combination of both. Many plans also allow voluntary partial repayments, which can help slow how quickly the debt grows.
Some homeowners choose a payment-term lifetime mortgage instead, committing to pay some or all of the monthly interest for a set period. Your home may be repossessed if you do not keep up repayments on a payment-term lifetime mortgage. Standard lifetime mortgages without a repayment commitment don't carry this risk in the same way, since there are no required monthly payments.
Lifetime mortgages are available from age 55, and lenders that are members of the Equity Release Council must include a no negative equity guarantee as standard.
A home reversion plan works differently. Instead of borrowing against your home, you sell all or part of it to a reversion provider in exchange for a cash lump sum, a regular income, or both. You keep a legal right to live in the property rent-free, or for a nominal rent, for the rest of your life, or until you move into long-term care.
Because the provider won't see any return until the property is eventually sold, they typically pay significantly below the market value for the share you sell, often somewhere between 20% and 60% of its true worth, depending on your age and health at the time. The older you are when you take out the plan, the higher the proportion you're likely to be offered, since the provider expects a shorter wait before the property is sold.
Home reversion plans are far less common than lifetime mortgages and are typically only available from around age 60-65 upwards. They suit homeowners who want certainty about how much of their property they're giving up, rather than a debt that grows with compound interest. Read our in-depth guide to the types of equity release for a fuller side-by-side comparison.
Not sure where to start
Our advisors compare lifetime mortgages and home reversion plans from a wide range of Equity Release Council-member lenders, and explain the difference in plain English.
The amount you can release depends mainly on your age, or the age of the youngest homeowner for joint applications, the value of your home, and, for some plans, your health and lifestyle. As a general rule, the older you are, the higher the proportion of your property's value you can access, because the lender expects to wait less time before the loan is repaid. See our full breakdown of equity release eligibility if you're not sure whether you qualify.
Two people the same age with an identical property value can be offered very different maximum amounts. Certain health conditions, from high blood pressure to more serious diagnoses, can actually increase what you're able to release through an enhanced lifetime mortgage. It's always worth mentioning your health history, even if it feels irrelevant.
These are typical ranges, not guarantees, and your maximum release also depends on your property's type and condition. Use our equity release calculator to get an early estimate based on your age and property value, then speak to an advisor for a personalised figure.
Setting up an equity release plan involves several separate costs, on top of any advice fee or commission arrangement. Typical costs include:
Altogether, total setup costs typically range from around £1,500 to £3,500, though this varies by lender and plan.
The biggest long-term cost of a lifetime mortgage isn't the setup fees, it's compound interest. Unless you make voluntary repayments, interest is added to your loan each year, and from then on, you're charged interest on the interest already added as well as the original amount released. This compounding effect means the debt can grow substantially over a 15-20 year plan, even though nothing further is being paid out.
Your home may be repossessed if you do not keep up repayments on a payment-term lifetime mortgage. Most current plans include a no negative equity guarantee, so however much interest accrues on a standard lifetime mortgage, you or your estate will never owe more than the property is worth when it's sold.
Because rates vary between lenders and change over time, check current equity release interest rates to see the range currently on offer. Your personalised illustration will confirm the exact rate for your circumstances, along with a projection of how your specific plan is expected to grow. Always ask to see this before deciding, and compare it against how much of your home's value you'd expect to leave behind.
Every equity release plan comes with trade-offs, and any advisor who doesn't mention them isn't doing their job properly. Understanding the downsides upfront is what makes equity release either a sensible decision or the wrong one for your circumstances.
I've seen clients approach equity release purely to boost retirement income, without realising it can reduce or remove their Pension Credit entitlement entirely. A benefits check before you proceed can sometimes reveal that a smaller release, or a different approach altogether, leaves you better off overall.
None of this means equity release is wrong for everyone. For many homeowners, it's a considered and appropriate decision. But these risks are exactly why independent advice, a full benefits check, and independent legal advice aren't optional extras - they're part of how the product is designed to be sold responsibly.
If you're concerned about how equity release, or any financial decision, might affect your income or benefits, MoneyHelper offers free, impartial guidance backed by the government. Visit moneyhelper.org.uk or call 0800 138 7777.
The catch
Equity release is a regulated financial product. Every firm that advises on or arranges lifetime mortgages must be authorised by the Financial Conduct Authority, and advisors must hold a specific equity release qualification on top of their standard mortgage qualifications.
Beyond that authorisation, most reputable lenders are also members of the Equity Release Council, the industry body that sets additional consumer protection standards. Its members' plans must include the following:
Equity Release Council standards
We compare a wide range of Equity Release Council-member lenders to find a plan that fits your circumstances.
Equity release isn't the only way to access money in later life, and for some homeowners, it isn't the best fit. It tends to suit those who want to stay in their home, need a larger sum than unsecured borrowing allows, and don't want, or can't manage, monthly repayments. If that doesn't sound like you, one of the alternatives below may work out better. An advisor can model your options side by side so you can compare the real costs before deciding.
Weighing up your options
Downsizing
Selling your current home and moving to a smaller or cheaper property can release more cash than equity release, without taking on any debt or paying compound interest. The trade-off is the cost, upheaval, and emotional impact of moving.
Remortgaging or a retirement interest-only mortgage
A standard remortgage or a retirement interest-only mortgage usually costs less overall than equity release, but both require you to keep up monthly repayments. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Unsecured borrowing
A personal loan or credit card can work for smaller, short-term needs, but isn't practical for larger sums, and lenders may be reluctant to offer larger amounts to older borrowers on a fixed income.
Family gifting or support
Some families choose to arrange financial support directly, sometimes with a formal agreement about repayment or future inheritance. This avoids fees and interest entirely but needs careful, honest conversations.
If you decide equity release is worth exploring further, the process is well-established and follows Financial Conduct Authority rules designed to protect you at every stage. Here's what to expect from first enquiry to receiving funds.
The process
Check your eligibility
You'll generally need to be aged 55 or over and own a UK property worth at least around £70,000. Joint applications use the age of the youngest applicant.
Speak to an equity release advisor
Financial Conduct Authority rules require anyone taking out equity release to receive advice from a qualified advisor before proceeding - this isn't optional.
Receive a personalised illustration
Your advisor provides a Key Facts Illustration setting out the costs, features, and projected growth of any plan you're considering.
Instruct a solicitor
Independent legal advice is a requirement, not a recommendation. Your solicitor confirms you understand the plan before anything is signed.
Property valuation
The lender arranges a valuation of your home to confirm the maximum amount available.
Offer issued and documents signed
Once the valuation and legal checks are complete, the lender issues a formal offer for you and your solicitor to review and sign.
Funds released
Once everything is signed off, your funds are released, typically within 6-10 weeks of your initial application, though this varies by lender.
Common questions
Equity release is a way for homeowners aged 55 and over to access money from the value of their home without selling it or moving out. The most common type is a lifetime mortgage, where you borrow against your property and the loan, plus interest, is normally repaid from the sale of your home when you die or move into long-term care. Most current plans include a no negative equity guarantee, so you'll never owe more than the property is worth when it's sold.
The main downsides are the impact of compound interest, which can significantly reduce the value of your estate over time, and early repayment charges, which can be steep if you want to repay some plans early. Equity release can also affect means-tested benefits such as Pension Credit and Council Tax Reduction, and it limits your options for further borrowing against the property. These risks don't rule out equity release for everyone, but they're why independent advice and a benefits check matter before you proceed.
How much you can release depends mainly on your age, your property's value, and sometimes your health. As a rough guide, homeowners around 55 can typically release 20-25% of their property's value, rising to around 40-50% from age 75 and over. Use our equity release calculator for an early estimate, or speak to an advisor for a personalised figure based on your circumstances.
It can. Releasing equity increases the money and savings recorded in your name, which can reduce or remove entitlement to means-tested benefits such as Pension Credit, Council Tax Reduction, and Universal Credit. It generally doesn't affect the State Pension, since that isn't means-tested. Always ask for a benefits check before proceeding, so you understand the full impact on your household income.
Yes, in most cases. Equity release plans that meet Equity Release Council standards include the right to transfer your plan to a new property, as long as it meets the lender's criteria and is suitable security for the loan. If the new property is worth less, you may need to repay some of the loan. Speak to an advisor before agreeing a move so you understand any conditions that apply to your specific plan.
When you die, or move into permanent long-term care, your property is normally sold and the loan plus any accrued interest is repaid from the proceeds. Any money left over goes to your estate. If you took out the plan jointly, it usually continues until the second person dies or moves into care. Because of the no negative equity guarantee on most current plans, your estate will never be asked to pay back more than the property is worth.
It depends entirely on your circumstances. Equity release can make sense if you want to stay in your home, need a larger sum than unsecured borrowing allows, and don't want or can't manage monthly repayments. It's less suitable if you're happy to downsize, want to preserve the full value of your estate for family, or could manage a standard remortgage instead. An advisor can model your options side by side so you can make an informed decision, not a rushed one.
What our clients say
Shortly after I spoke with Anna, she was also very helpful and made it effortless and a nice experience.
Had a really good experience regarding arranging a secured loan. They introduced me to a great advisor. Thanks for the help.
For once a loan transaction without stress and complications. Very impressed and highly recommended.
Thrilled to share my exceptional experience with Money Saving Advisors. The website made it incredibly simple and easy to connect with an advisor. They helped me find the best deal on my remortgage and secured a very competitive interest rate!
Great advice and money saved on mortgage.
I have previously declined a loan of the value I needed from various brokers, but this website found me a reputable broker with surprisingly decent rates.
Equity Release
Our equity release specialists can help you understand your options and find the right plan for your needs.
