Equity release offers homeowners, typically aged 55 and over, a way to access housing wealth through lifetime mortgages or home reversion plans. Each route has different implications for ownership, interest, estate value and benefits. Get FCA-regulated advice, compare drawdown versus lump-sum options, and factor in valuation, legal and arrangement costs before deciding.
What equity release is and who it suits
Equity release lets a homeowner access some of their house value as cash without selling or moving out. In the UK the most common routes are a lifetime mortgage (the lender takes a charge on the home but you retain ownership) and a home reversion plan (you sell part or all of the property in exchange for a lump sum or regular payments while continuing to live there).These products are typically used by older homeowners who have substantial home equity and want money for retirement, home improvements, reducing debt, family gifts, or to top up income. Providers usually set a minimum age for eligibility (commonly 55+ for lifetime mortgages) and terms differ between products and firms.
Main features and trade-offs
- Lifetime mortgage: you keep ownership; interest normally rolls up and is repaid from the property when you die or move into long-term care. Many borrowers choose a drawdown option to take smaller amounts over time, which limits the interest that compounds.
- Home reversion: you sell a share of your property, usually at a discounted value, and the buyer receives their share when the property is sold. This reduces the estate you can leave behind.
Costs and practical steps
Expect several costs: initial advice fees (from a regulated financial adviser), valuation fees, legal fees for independent legal advice, and lender arrangement fees. Interest on lifetime mortgages compounds unless you make payments, which can significantly reduce the remaining equity over time.If you are considering equity release:
- Get regulated independent financial advice and a solicitor experienced in equity release.
- Compare lifetime mortgage versus home reversion in the context of your inheritance goals and care plans.
- Consider drawdown lifetime mortgages if you may need staged access to funds (to control how much interest accrues).
Alternatives to consider
Before committing, compare alternatives such as downsizing, remortgaging, a standard mortgage, or using savings and investments. Each has different tax, benefit and estate implications.
Next steps
Speak to an FCA-regulated adviser and an independent solicitor. Ask providers about the Equity Release Council standards, no-negative-equity guarantee, any early repayment charges, and how the product will affect means-tested benefits and future care costs.FAQs about Equity Release Scheme
Who can use equity release?
Equity release is generally aimed at older homeowners with significant home equity. Lifetime mortgage providers commonly set minimum ages (often 55+). Eligibility depends on provider criteria and property value.
What is the difference between a lifetime mortgage and a home reversion plan?
With a lifetime mortgage you retain ownership and borrow against the property; interest usually rolls up and is repaid on sale. With home reversion you sell a share of the property, usually at a discount, and the buyer receives their share when it's sold.
Will I ever owe more than my home is worth?
Most mainstream providers follow Equity Release Council standards and offer a no-negative-equity guarantee, which means you will not be required to repay more than the net sale proceeds of the property.
How will equity release affect my inheritance and benefits?
Using equity release reduces the value of the estate you can leave to beneficiaries. It can also affect entitlement to means-tested state benefits. Check impacts with a regulated adviser and solicitor.
What costs should I expect?
Typical costs include adviser fees, valuation fees, legal fees for independent legal advice, arrangement fees from the lender, and ongoing interest (particularly for lifetime mortgages).