Please leave your details here and we’ll email you a copy of our brochure for business clients.
What is Equity Release and How Does it Work in the UK?
July 3, 2026
Equity release in the UK allows some homeowners to access money tied up in the value of their home while continuing to live there.
In the UK, it’s usually aimed at older homeowners, often from age 55 onwards. The money released is normally tax-free and may be taken as a lump sum, in smaller amounts over time or – depending on the product – as regular payments.
Equity release can be useful in some circumstances, but it’s a long-term decision. It can reduce the value of your estate and affect what you leave behind. It may have an impact on means-tested benefits. For that reason, it should be understood carefully before any decision is made.
What is Equity Release?
Equity release is a way of unlocking part of the value of your property without selling it and moving out. For many people, the basic idea is that you stay in your home, receive money based on part of its value and the provider is repaid later. This usually happens when you die or move permanently into residential or nursing care.
It’s mainly used by older homeowners who have wealth tied up in their property but would like more access to money in later life. Some people consider equity release to support retirement income or clear an existing mortgage.
Equity release isn’t the same as selling your home on the open market. Depending on the type of product, you may either borrow against the value of your property or sell a share of it while keeping the right to live there.
Equity Release – can help you realise some of the wealth currenlty locked into assets you own
How Does Equity Release Work?
The UK equity release process is advice-led. Before any product is recommended, a qualified adviser should look at your circumstances, why you’re considering equity release and whether other funding options may be available.
This may include your income, savings, property, existing mortgage, family position and longer-term needs.
The process usually follows these steps:
- Initial advice – You speak to a qualified adviser about your circumstances and what you want the money for. They should also talk to you about whether other options might be more suitable.
- Property valuation – If equity release appears suitable and you decide to continue, the provider will arrange for your property to be valued. This helps confirm whether the property meets the provider’s criteria and how much may be available.
- Formal offer – If the application is accepted, the provider will issue an offer. This should set out the amount available, the interest rate, any fees and the main features of the plan.
- Legal advice – A solicitor will review the documents and explain the long-term implications before the plan completes.
- Funds released – Once everything is agreed, the funds are released. If there’s an existing mortgage or secured loan, this will usually need to be repaid first, often using part of the money released.
- Repayment later – The plan is normally repaid when the homeowner dies or moves permanently into long-term care. The property is usually sold and the provider is repaid from the proceeds. Any money left after repayment goes to the estate or beneficiaries.
You can discuss your equity release options with our advisers
What are the main types of equity release?
There are two main types of UK equity release: lifetime mortgages and home reversion plans.
Lifetime mortgage
A lifetime mortgage is the most common type of equity release. In this case, you take out a loan secured against your home. You keep ownership of the property and continue living there.
Monthly repayments aren’t usually required. Instead, interest may be added to the loan. This is called roll-up interest.
Because interest is added to the amount already owed, the debt can grow over time. The loan and interest are usually repaid when the home is sold after death or when the homeowner moves into long-term care.
Some plans may allow voluntary payments. This can help reduce or control the amount of interest that builds up, depending on the terms of the plan.
Home reversion plan
A home reversion plan works differently.
Instead of borrowing against the home, you sell part or all of your property to a provider. In return, you receive money as a lump sum, regular payments or a combination of both. You can usually continue living in the home rent-free or for a nominal rent. When the property is eventually sold, the provider receives its agreed share of the sale proceeds.
Home reversion plans are less common than lifetime mortgages. They don’t have roll-up interest in the same way as a lifetime mortgage, but the homeowner will usually receive less than the market value for the share of the property sold.
Who Can Consider Equity Release?
Equity release is designed for older homeowners rather than general borrowers.
The usual minimum age for a lifetime mortgage is 55. For home reversion plans, the minimum age is often higher. Applicants must normally own a UK property that’s their main home and meets the provider’s property requirements.
The amount available usually depends on age, property value, the type of plan and the provider’s criteria. If there’s already a mortgage or secured loan on the property, this will usually need to be cleared.
People consider equity release for different reasons. These may include increasing retirement income, repaying an outstanding mortgage, funding home improvements, adapting the home for later life or supporting children or grandchildren.
These are common uses, but they don’t make equity release suitable in every case. The reason for releasing money should be considered alongside the long-term effects.
What are the Risks of Equity Release?
Equity release has important risks and trade-offs.
With a lifetime mortgage, the debt can grow over time if no repayments are made. Interest is charged on the original loan and on interest already added. The longer the plan runs, the greater the effect may be.
Equity release can also reduce inheritance. With a lifetime mortgage, the loan and interest are repaid from the property when it’s sold. With a home reversion plan, the provider receives its agreed share of the sale proceeds. In both cases, there may be less left for family or other beneficiaries.
Taking money from your home may also affect means-tested benefits. This can depend on how much is released, how it’s held and how it’s used.
There may also be less flexibility later. Equity release can affect future decisions around moving home, downsizing, care planning or repaying the plan early. Some plans may include early repayment charges.
Fees will also apply. These may include advice fees, legal fees, valuation fees and arrangement fees. The offer should set out the costs before the plan goes ahead.
What Safeguards are in Place for Equity Release?
Equity release is regulated in the UK by the Financial Conduct Authority (‘FCA’).
This means firms must meet regulatory standards and consumers should receive suitable advice. Legal advice is also part of the process, so the homeowner understands the terms before agreeing to proceed.
Many equity release products are offered by providers that are members of the Equity Release Council. This is the UK’s trade body for equity release and later life lending. They set the standards and protections that members commit to uphold. The standards help customers use their property wealth safely and responsibly. The Equity Release Council’s standards include a no-negative-equity guarantee, which means you or your estate should never owe more than the value of the property when it’s sold, as long as the plan meets the relevant standards. They also include the right to remain in your home for life, or until moving into long-term care, provided the plan conditions are met.
These protections are important, but they don’t remove every risk. A regulated product can still be unsuitable if it doesn’t fit the homeowner’s circumstances, so trusted advice is essential.
What are the Alternatives to Equity Release?
Equity release is one way to access money, but it’s not the only option.
Alternatives may include:
- Downsizing
- Using savings
- Reviewing pension income
- Taking a different type of mortgage or loan
- Changing spending plans
- Renting out part of the home
- Checking benefit entitlement
Each option has its own advantages and disadvantages. Considering alternatives is an important part of deciding whether equity release is suitable.
What to Consider Before Taking Equity Release
Equity release can allow older homeowners to access money from their home while continuing to live there.
It may provide useful support in later life, but comes with long-term consequences:
- The amount owed can grow
- The value of the estate may reduce
- Entitlement to means-tested benefits could be affected
Before making a decision, it’s important to understand how equity release works, what it may cost and whether other options could be more suitable.
Frequently Asked Questions About Equity Release in the UK
Equity release is a way for some UK homeowners to access money tied up in the value of their home without having to move out. It’s usually aimed at older homeowners, often from age 55 onwards.
The money may be taken as a lump sum, in smaller withdrawals or as regular payments. This depends on the type of equity release product chosen. It’s normally repaid when the homeowner dies or moves permanently into long-term care.
Yes. Equity release is designed to let homeowners access money from their property while continuing to live in it.
With many plans, you can usually stay in the property for life or until you move permanently into long-term care. You must meet the conditions of the plan – which will include keeping the property insured and maintained.
The exact terms will depend on the type of equity release product and the provider, so these should be explained clearly before you decide.
With many lifetime mortgages, monthly repayments aren’t usually required. Instead, the interest may be added to the loan and repaid later when the property is sold.
Some plans allow voluntary repayments, which may help reduce the amount of interest that builds up. This depends on the product and provider, so it’s important to understand the repayment options before going ahead.
Home reversion plans work differently because they involve selling part or all of the property, rather than taking out a loan secured against it.
When you die or move permanently into long-term care, the equity release plan is usually repaid from the sale of the property.
- With a lifetime mortgage, the loan and any interest are repaid to the provider
- With a home reversion plan, the provider receives its agreed share of the sale proceeds
Any money left after the provider has been repaid will usually go to your estate or beneficiaries.
Equity release can reduce the inheritance you leave behind because the provider is repaid from the value of your home when the property is sold.
- With a lifetime mortgage, the loan and any interest are repaid from the sale proceeds
- With a home reversion plan, the provider receives its agreed share of the property value
This means there may be less money left for your estate or beneficiaries. Some plans may include inheritance protection features, but this depends on the product and should be explained before any decision is made.
Yes. Equity release can affect means-tested benefits. It’s because money released from your home may be treated as savings or capital.
The impact might depend on:
- How much money is released
- Whether it’s taken as a lump sum or in smaller amounts
- How it’s held or used
For example, keeping a large amount in savings could affect entitlement to some benefits.
Important information
The information on this page is for general guidance only and does not constitute personal financial advice. We recommend seeking advice tailored to your individual circumstances before making financial decisions.
