Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
The two types of equity release
A lifetime mortgage is a loan secured on your home that you keep ownership of. You can take a lump sum or draw money down in stages, and there are usually no monthly repayments — interest rolls up and is repaid, with the loan, when the home is sold after you die or move into long-term care. Some plans let you make voluntary repayments to limit how much interest builds up.
A home reversion plan involves selling all or part of your home to a provider in return for a lump sum or regular payments, while you keep the right to live there rent-free for life. You typically receive less than the market value of the share you sell.
How rolled-up interest affects the cost
With a lifetime mortgage, interest is charged on the loan and on interest already added, so the debt compounds over time. The longer the plan runs, the more of your home's value it takes up. Drawdown plans can reduce the cost because interest is only charged on money once you take it.
Plans that meet Equity Release Council standards include a no-negative-equity guarantee, meaning you or your estate will never owe more than the value of your home when it is sold. Arrangement, valuation and legal fees also apply, and early repayment charges can be substantial if you repay early or move to a property the provider won't accept.
What to think about before you decide
- Inheritance — equity release reduces the value of your estate, so talk to your family early.
- Means-tested benefits — releasing cash can affect entitlement to benefits such as Pension Credit.
- Future plans — moving home or needing care later may be affected by the plan's terms.
- Cost over time — compare the total amount that could be owed, not just the interest rate.
Alternatives to equity release
Depending on your situation, alternatives may include downsizing, a retirement interest-only mortgage (where you pay the interest monthly so the debt doesn't grow), using savings or other assets, help from family, or checking whether you are entitled to benefits or grants you aren't claiming.
You'll need advice from a qualified equity release specialist before taking out a plan. MoneyHelper (moneyhelper.org.uk) offers free, impartial guidance on equity release and its alternatives, and the Equity Release Council publishes consumer information on its standards.
Equity release guides
Lifetime mortgages and home reversion explained in plain English.
GuideEvery fee, plus the rolled-up interest that dominates the long-term cost.
GuideTwo ways to borrow in retirement, and how to tell which one fits.
Common questions
What is equity release?
What is equity release?
Equity release lets homeowners aged 55 and over access the value tied up in their property without selling. The most common type is a lifetime mortgage, where interest rolls up and is repaid when the home is sold after you die or move into long-term care.
Will I still own my home?
Will I still own my home?
With a lifetime mortgage, yes — you keep ownership. With a home reversion plan, you sell all or a share of your property in exchange for a lump sum or regular payments, while keeping the right to live there.
How much can I release?
How much can I release?
It depends mainly on your age, your health and the value of your home. The older you are, the more you can usually release. Providers set their own limits.
Will it affect my benefits?
Will it affect my benefits?
Releasing equity can affect means-tested benefits such as Pension Credit. Check how any cash would affect your entitlement before proceeding — MoneyHelper and benefits charities can help.
Is there a no-negative-equity guarantee?
Is there a no-negative-equity guarantee?
Plans that meet Equity Release Council standards include a no-negative-equity guarantee, meaning you or your estate will never owe more than your home is worth when it is sold.
Can I repay a lifetime mortgage early?
Can I repay a lifetime mortgage early?
Usually, but early repayment charges can be large, particularly on fixed-rate plans. Many plans allow limited voluntary repayments each year without a charge. Check the terms carefully before you commit.
Do I need advice to take out equity release?
Do I need advice to take out equity release?
Yes. You'll need advice from a qualified equity release specialist before taking out a plan, and you'll also need your own solicitor. It's sensible to involve your family in the conversation.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
Important: This page is general information, not financial advice or a personal recommendation. Product features and eligibility vary by provider — check the provider's own terms before you buy or apply.