Remortgaging can help take out a new mortgage to release equity from your home. You’ll borrow against your property and make monthly repayments covering interest and the original loan. This option requires affordability checks and regular payments.
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Equity release mortgages
Compare equity release mortgages
Equity release allows homeowners aged 55 and over to unlock tax-free cash from their property without having to move out. There are no monthly repayments - what you borrow is usually repaid when your home is sold, typically after you move into long-term care or pass away.
Your home/property may be reposessed if you do not keep up repayments on your mortgage. The FCA does not regulate buy-to-let mortgages for commercial and investment properties.
What is equity release?
Equity release lets you access some of the value tied up in your home while continuing to live there. It’s designed for people later in life who want extra funds for things like home improvements, supplementing retirement income, or helping family financially.
The money can be taken as a lump sum or in smaller amounts over time. Repayment usually happens when the property is sold, which is typically after you move into long-term care or pass away.
There are two main types of equity release:
Lifetime mortgage – The most common option. You borrow against your home’s value, interest is added and compounds over time. You remain the legal owner of your property.
Home reversion plan – Much less common (less than 1% of the market). You sell part or all of your home at below market value but continue living there rent-free for life.
Equity release can provide flexibility and financial freedom, but it’s not suitable for everyone. It’s important to understand the long-term impact and seek professional advice before making a decision.
How does equity release work?
Equity release is straightforward in principle:
You stay in your home and unlock part of its value.
Funds can be taken as a lump sum or in stages.
Repayment usually happens when you die or move into care.
The amount you can release depends on your age, health, and property value.
Lifetime mortgage
You remain the legal owner of your home.
Interest is added to the loan and compounds over time.
Repayment covers the original loan plus interest when the property is sold.
Some plans allow you to pay interest as you go, reducing the overall cost.
Home reversion plan
You sell part or all of your home at below market value.
You stay in the property rent-free for life.
Typically suited to specific circumstances and far less common.
Costs to consider
Equity release comes with costs that you should factor in:
Interest rates
Higher than standard mortgages; most are fixed for life, but some providers offer variable rates.
Fees
Arrangement, valuation, legal, and advice fees may apply.
Impact on inheritance
Equity release reduces the value of your estate.
Benefits
Cash released could affect means-tested benefits, including help with care costs.
Who is eligible for an equity release mortgage?
To qualify for equity release, you’ll need to meet these criteria:
Property ownership – You must own your home. If there’s an outstanding mortgage, it must be cleared using the funds released.
Age requirements – At least 55 for lifetime mortgages; 65 for home reversion plans.
Property condition – Your home should be in good repair and meet valuation standards.
Ability to cover fees – You’ll need to budget for associated costs such as arrangement fees, valuation, legal fees, and advice charges.
How much could you release?
The amount you can release depends on:
The value of your home
The type of equity release product you choose
For a lifetime mortgage, you can usually release between 25% and 60% of your home’s value. In general, the older you are, the more you’re likely to borrow.
Home reversion plans are much less common and typically offer a lower percentage of your property’s value.
Our handy equity calculator can help you work out how much equity you own.
Equity Release Council safeguards
All plans recommended by Royal London Equity Release Advisers follow the UK industry body Equity Release Council standards. This means:
No-negative-equity guarantee – You’ll never owe more than your home’s value when sold.
Clear terms and protections for customers.
Advice designed to ensure suitability and transparency.
Alternatives to equity release
Remortgaging
Remortgaging can help take out a new mortgage to release equity from your home. You’ll borrow against your property and make monthly repayments covering interest and the original loan. This option requires affordability checks and regular payments.
Accessing your pension
If you have a defined contribution pension and are over 55, you can usually take up to 25% tax-free. Withdrawals beyond this are taxable, so it’s important to understand the impact on your retirement income.
Downsizing
Selling your home and moving to a smaller property can free up money without borrowing. Factor in costs like estate agent fees, legal charges, and moving expenses when considering this option.
Alternatives to equity release
Remortgaging
Accessing your pension
If you have a defined contribution pension and are over 55, you can usually take up to 25% tax-free. Withdrawals beyond this are taxable, so it’s important to understand the impact on your retirement income.
Downsizing
Selling your home and moving to a smaller property can free up money without borrowing. Factor in costs like estate agent fees, legal charges, and moving expenses when considering this option.
Get expert advice
Equity release is a big decision. Speaking to a specialist adviser can help you understand the pros and cons and find the right plan for your needs.
Equity release FAQs
How risky are equity release mortgages?
Because the interest compounds, the debt grows rapidly. This means when the home is sold there may be no equity left – although some products allow you to ring-fence a percentage of the property value for your loved ones.
Choosing a property with a no negative equity guarantee, meanwhile, means you will never owe the equity release provider more than your property is worth.
Can I sell my house if I have an equity release mortgage?
Most equity release plans will allow you to move your mortgage to a new property if you decide to sell your house, as long as the new property meets the lender's criteria. However, you might end up paying early repayment charges, so it’s worth considering this when doing equity release comparisons.
Can I take out an equity release scheme if I’m under 55?
No, and you may need to be even older than that. The minimum age for equity release is 55, and this usually only applies to lifetime mortgages. For home reversion schemes, you typically need to be at least 65. With both types of schemes, you’ll also generally get better deals the older you are.
Will taking out an equity release mortgage affect my state benefits?
Yes, taking out a lifetime mortgage or using a home reversion plan can result in you losing means-tested benefits, including pension credit, council tax support and the Cold Weather Payment. This is because you will have more cash in savings and/or more income each month.
What happens on death with equity release mortgages?
When you die, any amount you owe to the equity release provider will need to be repaid within 12 months. Normally this can be done by selling the property, although your beneficiaries can also choose to pay off the loan and keep the property if they can afford to do that.
How do I pay interest on equity release?
There are two ways you can pay off equity release interest:
1. Deferring interest on equity release
If you take out a lifetime mortgage and choose to roll up the interest, it compounds and then is paid when the house is sold. In other words, the amount you owe will essentially double every 15 years. This is a reason to be cautious of lifetime mortgages if you hope to leave a good inheritance for your family.
2 . Paying off equity release interest as you go
You can choose to pay off the interest on the mortgage as you go which avoids the risk of compounding. You can also take income over time instead of a big upfront lump sum, which means the amount you owe less interest in the end.
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