Skip to main content

Equity Release

Equity Release

Equity release allows homeowners aged 55 and over to access the value tied up in their property without having to move. There are two main types: lifetime mortgages and home reversion plans.

Am I eligible for equity release?

You may be able to release equity from your home if you can answer “yes” to the following:

  • Are you aged between 55 and 90?
  • Is your property worth more than £70,000?
  • Do you own your own home (with or without a mortgage)?
  • Are you looking to borrow between £10,000 and £500,000?
  • Do you currently live in the UK?

Lifetime mortgages

A lifetime mortgage is the most common form of equity release. You borrow a lump sum or series of smaller amounts secured against your home, while retaining ownership. The loan, plus any interest, is typically repaid when you move into long-term care or pass away.

There are three main variations:

  • Interest Roll-Up: no monthly payments at all. Interest is added to the loan and repaid when the property is sold
  • Interest Only: you make regular monthly interest payments, keeping the loan balance from growing
  • Optional Payments: you can choose to pay some, all, or none of the monthly interest. Most products allow overpayments of up to 10% of the mortgage each year

How can the money be used?

The funds from equity release can be used for virtually any legal purpose, including:

  • Additional tax-free income to improve lifestyle
  • Home renovations or improvements
  • Clearing an existing interest-only mortgage
  • Helping family members with a deposit for a home
  • Consolidating existing debts such as credit cards and loans
  • A major purchase such as a new car, caravan, or holiday

What about poor health or adverse credit?

Poor health does not necessarily prevent you from releasing equity. In fact, some providers offer enhanced plans for people with health conditions, which may allow you to release a larger amount. Adverse credit is also not usually a barrier, as lenders are primarily concerned with the value of your property and the amount of equity you have in it.

Important considerations

  • Equity release reduces the value of your estate and the inheritance you leave behind
  • Interest can accumulate quickly on lifetime mortgages if not repaid
  • It may affect your entitlement to means-tested benefits
  • Most plans include a “no negative equity guarantee” meaning you will never owe more than the value of your home
  • Independent advice from a qualified equity release adviser is strongly recommended

Free guidance is available from MoneyHelper.

See if equity release is for you

Your home may be at risk if you do not keep up repayments on a mortgage or any other debt secured on it.

Homeowner Credit is for information purposes only. We do not provide loans, credit broking or financial advice. Any loan products will be provided by the lender or broker on the website you are redirected to. Please review their terms and regulatory information before applying.