Equity release explained

If you're over 55 and thinking about releasing equity from your home, our informative and straightforward guides are designed to help you understand how it works and what you need to consider, including:

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Understanding equity release

What is equity release?

Equity release is a way you can access the money tied up in your home without having to move. The cash is tax-free, yours to use how you choose and can be paid in a lump sum or instalments. Common reasons for releasing equity include making home improvements, boosting your retirement income or paying off debt.

How does equity release work?

There are two types of equity release to choose from: the more popular lifetime mortgage and the home reversion plan.

The amount of equity you can release will depend on your own personal circumstances including your age and the value of your property.

A lifetime mortgage is designed to last for life. You're not required to make any monthly repayments unless you choose to, still have the freedom to move home and you can release equity if you have an existing mortgage on your property. You just need to repay the outstanding debt with the money you release.

This type of mortgage will impact the value of your estate and could affect any benefits your currently receive, so it’s not the right choice for everyone. Before going ahead you should seek professional advice from a qualified financial adviser who will explain the pros and cons and discuss the alternatives with you.

Read our lifetime mortgage guide

When can you release equity?

With a lifetime mortgage, you can release equity if you're over 55 and meet the other eligibility criteria. If you're 65 or older, you could also explore releasing equity through a home reversion plan.

How much could you borrow?

How much you could borrow using equity release will usually depend on three main factors: the value and condition of your property, your age and your health. You may be able to release up to 60% of your home's equity, depending on your personal circumstances.

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What can the money you release be used for?

The money you release from your property can be used however you wish. Find out how other people have used their cash sum.

How much does equity release cost?

The cost of equity release includes fees for setting up the loan and, in the case of a lifetime mortgage, the interest that accumulates over time.

Is equity release a good idea?

Equity release may be worth considering but it's important to weigh up the benefits and risks before making a decision.

How does equity release work? - Video

Watch our one minute video explaining how equity release works

Are you eligible for equity release?

Eligibility for equity release depends on several factors, including your age and the value of your property, but ultimately the exact requirements to qualify will be dictated by each provider's lending criteria.

Typically to qualify for a lifetime mortgage you will need to meet the following criteria:

You or the youngest home owner must be at least 55 years of age
Your property must be your main residence and located in the UK or Northern Ireland
The value of your property should be at least £70,000
The property must be habitable and in a good state of repair

Eligibility for a home reversion plan is similar except the minimum age is 65 years old.

Where to get advice on equity release

Equity release is regulated by the Financial Conduct Authority (FCA) as an ‘advised product’. This means that all companies offering equity release must provide advice either via the lender themselves, an Independent Financial Adviser (IFA) or an equity release broker.

Anyone offering advice on equity release must be qualified to do so. By choosing a specialist adviser who is a member of the Equity Release Council (ERC), you will be taken through a structured financial advisory process, which should answer any questions you have and include a review of your personal circumstances. It should also explain the benefits and risks as well as any alternative forms of funding available to you. As Martin Lewis always says about equity release, it’s important to consider all of your options before making any decisions.

Be aware that some advisers will only be able to advise you on the products they offer. Whereas a suitably qualified IFA or specialist mortgage broker will be able to compare equity release plans from a range of providers, not just individual companies, giving you a much broader view of what's available and what products may be best suited to you.

It’s also important to choose a lender who's a member of the Equity Release Council to ensure you're protected by their safeguards and rules. So, avoid equity release companies who don’t have their seal of approval.

To help you understand more about equity release and answer any questions you may have, we work in association with Age Partnership. They offer free initial advice with no obligation and have agreed exclusive plans with leading lenders you may not be able to get elsewhere. Alternatively you can find details of other specialist brokers, IFAs and providers on the Equity Release Council’s website.

If you have any questions and or would like advice, please call us on 0800 133 7656 or request a call back – you're under no obligation to go further and there's no cost to you for this advice*.

Need help? Request a call back

More information on equity release from our expert Ashley Shepherd

How much cash can I release?

Calculate the compound interest on your loan

Leading equity release companies reviewed

What does Martin Lewis think?

How long does equity release take?

Questions to ask your adviser

Is equity release tax free?

Using equity release to pay off your mortgage

Ways to contact us

Call 0800 133 7380

Arrange a callback

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Answers to your questions on equity release

Can you repay equity release early?
- You can repay an equity release mortgage early but you may face early repayment charges, which can be expensive.
  
  All plans must allow you to repay a percentage of the loan each year, typically around 10% however the actual amount will depend on your lender’s terms and conditions.
  
  Some plans allow you to repay the debt free of charge after a certain number of years. So, if you think early repayment may be a possibility, talk it through with your adviser when you are ready to compare plans.
Can I sell my house if I have equity release?
- Yes, you can. One of the standards set out by the Equity Release Council is that plans should give customers the flexibility to move house. You will just need to ensure your lender approves of the property you intend to buy.
Can I have equity release on a buy to let property?
- Typically equity release is offered on properties that are your main residence however you can also get equity release on a buy to let. Fewer companies offer this type of mortgage and the lending criteria are more stringent but it is possible.
Where can I find reviews on equity release companies?
- You can read our reviews of leading UK companies or look at customer review sites such as Trustpilot and Feefo.

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Our aim is to provide you with clear and accurate information to help you research your chosen financial products and services. The material on this site is for general information only and does not constitute any form of advice or recommendation.

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None of the above arrangements constitute advice or recommendations, as other products and companies are available. You should always obtain independent, professional advice for your own situation.

The information provided on this site is accurate at the date of publication, occasionally however, things will change before we have had the opportunity to update them, so please do check. Always do your own research and take independent advice.

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Over50choices is an independent company and regulated by the FCA (No.594280) for insurance products only and a member of the Equity Release Council.