How does equity release work in the UK?
Equity release is a financial product that allows homeowners aged 55 and over to access money (known as equity) that is tied up in their home without having to sell or move out.
There are two main types of equity release in the UK, and each work slightly differently:
Lifetime Mortgage: You borrow money through a loan, which is secured against your home. You continue to own your home, and the loan, plus interest, is repaid when you die or move into long-term care.
Home Reversion Plan: You sell part or all of your home to a reversion provider in exchange for a lump sum or regular income payments. You usually stay in the property rent-free for life, but you’ll receive less than the full market value for the share you sell to the reversion provider. When the property is eventually sold, the provider takes their share of the proceeds.
With either option, the first step is to speak to a qualified equity release adviser. Independent financial advice is required by law before proceeding, and your adviser will help assess your needs, explain the pros and cons, and guide you to the most suitable product. Find out more about how equity release works.
How do I release equity from my house?
There are several ways to release equity from your home, depending on your age, financial situation, and long-term plans. The most common options include:
Lifetime Mortgage: A popular equity release product for homeowners aged 55 and over. You borrow a lump sum or drawdown facility secured against your property, with no monthly repayments. The loan, plus interest, is repaid when you die or move into permanent care.
Home Reversion Plan: Also for those aged 55+, this product involves selling a portion (or all) of your home to a reversion provider in exchange for a lump sum or regular payments. You usually stay in your home rent-free for life. The provider receives their share of the sale proceeds when the property is sold after your death or when you enter long-term care.
Remortgaging: You take out a new, larger mortgage on your home and release the extra cash as a lump sum. This is a common option for younger homeowners or those who don’t qualify for equity release.
Secured loan: You borrow a lump sum secured against your property, without replacing your existing mortgage.
Downsizing: You sell your current home and move to a cheaper (usually smaller) one, releasing the difference in value as cash.
Read our guide to discover more about how to release equity and which option is best suited for you
Can I release equity from my house under 55?
Yes, you can. While equity release products like lifetime mortgages and Home Reversion Plans are only available from age 55, you still have options. If you're under 55, you can remortgage, downsize, or take out a secured loan (also known as a second-charge mortgage, home loan, or equity loan).
Do I need a solicitor for equity release?
Yes you do. It is a legal requirement to instruct an independent solicitor when taking out an equity release product. They will:
Help explain the legal aspects involved in equity release
Ensure you understand the risks and long term implications
Handle the conveyancing process, including checking the property title and transferring funds
Represent your best interests throughout
This step is essential to protect you, especially as equity release involves your home and has lasting effects on your estate. Contact us today to get your equity release conveyancing quote.
What are the benefits of equity release?
Key advantages to equity release include:
Access to tax-free cash: You’ll receive a lump sum or regular payments, all tax-free, to spend however you choose.
Stay in your home: With most equity release products, you can continue living in your home for life.
No monthly repayments: The loan, plus interest, is usually repaid when you die or sell the property. Some plans also allow voluntary repayments to help reduce interest over time.
Peace of mind: With a joint equity release, you can typically stay in your home if your partner passes away. The loan is usually repaid when the last borrower dies or enters care.
Protected by expert advice: You can only take out equity release after getting regulated financial advice and appointing an independent solicitor, ensuring your options are clear and your interests are protected.
What are the risks of equity release?
Various risks and key considerations for equity release include:
Difference in regulations: All equity release products are FCA-regulated, but not all providers belong to the Equity Release Council (ERC). ERC products include extra safeguards, like a no negative equity guarantee and the right to stay in your home for life. Check for these protections before committing.
Reduced inheritance: As the loan is repaid when your home is sold after death or moving into long-term care, there will be less money left in your estate for your beneficiaries.
Impact on state benefits: Accessing a lump sum through equity release can affect your eligibility for means-tested benefits such as Pension Credit or Savings Credit.
High interest and reduced equity: Equity release mortgages often have higher interest rates, which build up over time and reduce the equity left in your home.
Receiving less than market value: With Home Reversion Plans, when you sell part (or all) of your property, the amount you receive is typically well below the market value of that share.
Sell my home quick services vs equity release: what should I do?
Selling your home and downsizing lets you access your property’s equity without taking on debt, which may help preserve inheritance. But if you need a fast sale, you might get less than market value. Selling also means moving out and paying costs such as conveyancing and removals.
Equity release unlocks cash while you keep living in your home. The loan, plus interest, is repaid when you pass away or move into care. You’ll also need to budget for fees, including advice, valuation, and legal costs.
The right choice depends on your age, finances, and whether you want to stay in your home. Both options have pros and cons, so it’s important to seek independent financial and legal advice before making a decision.
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