Equity release can help some homeowners access money tied up in their property without selling their home outright or moving straight away.
For many people, this means using a lifetime mortgage, where you borrow against your home and the loan is usually repaid when the property is sold.
It can provide more flexibility in later life, but it is not a decision to rush. Equity release may affect your estate, inheritance, benefits and future choices, so it is worth comparing it carefully with other later-life mortgage options before you decide.
Before choosing equity release
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Be clear on what the money could help you do
Equity release may support later-life plans, but the reason for borrowing matters.
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See the long-term cost clearly
If interest is added to the loan, the amount owed can grow over time and reduce the equity left in your home.
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Compare your later-life options first
Downsizing, remortgaging, a retirement interest-only mortgage or using savings may be worth reviewing before equity release.
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Protect your future flexibility
Care needs, moving home, inheritance wishes and means-tested benefits may all be affected, so advice is important before you decide.
What is equity release?
Equity release lets eligible homeowners unlock money from their home’s value. It is usually available from age 55 and is for people who want to access some of their property’s value without moving.
You can take the money as a lump sum, in smaller withdrawals over time, or a mix of both, depending on the product.
The two main types of equity release are:
- Lifetime mortgage: you borrow money against your home and keep ownership.
- Home reversion plan: you sell all or part of your home to a provider, usually for less than market value, and keep the right to live there.
Equity release is different from a standard mortgage or a retirement interest-only mortgage. Interest, repayment terms, and the long-term effect on your finances can be very different.
How does equity release work?
The amount you can release will depend on your property value, age, existing mortgage and provider criteria. If you still have a mortgage, it will usually need to be repaid as part of the process.
Most equity release plans are lifetime mortgages. With this type of plan, the loan is secured against your home. Some plans do not require monthly repayments, although voluntary or interest-only payments may be available.
If interest is not paid, it is usually added to the loan. This means the amount owed can grow over time and reduce the equity left in your home.
The loan is usually repaid when the property is sold, often after the last borrower dies or moves permanently into long-term care.
How much equity could you release?
You usually cannot release all the equity in your home. The amount available will depend on your age, property value, health, any existing mortgage and the provider’s criteria.
Older borrowers may be able to release a higher percentage of their property’s value, although this varies between providers. Some may also consider health and lifestyle factors.
An equity release calculator can give you a rough idea of what may be available. However, the maximum amount is not always the right amount to take.
Before deciding, compare how the loan could grow, how much equity may remain and whether another later-life mortgage option could be more suitable.
What equity release could look like
Imagine your home is worth £300,000 and you still have £55,000 left to pay on your mortgage. You decide to release £90,000 from your home.
What this means
Example amount
Property value
£300,000
Total amount released
£90,000
Existing mortgage cleared
£55,000
Cash available before fees
£35,000
In this example, £55,000 of the released amount is used to clear your existing mortgage. The remaining £35,000 is available to you as cash before fees.
With most lifetime mortgages, the loan and interest are usually repaid when your home is sold.
Illustration only. The amount you can release, costs and impact on your estate will depend on your circumstances and provider criteria.
What could equity release be used for?
People consider equity release for different reasons. The reason for releasing money matters because it can affect whether the decision feels suitable over the long term.
Common reasons may include:
- Repaying an existing mortgage
- Making home improvements
- Adapting a home for later-life needs
- Supporting family financially
- Creating extra retirement flexibility
- Paying for a large one-off cost
Equity release should be considered carefully if the money is being used to manage debt, everyday spending or affordability pressure.
If you are struggling with debt, it may be better to speak to a debt adviser before using your home to raise funds.
Types of equity release to compare
Different equity release products and payment options work in different ways. Before deciding, it helps to understand the main routes and how the money could be released.
Plan types
Lifetime Mortgage
You borrow against your home and retain ownership.
- The loan, plus any accrued interest, is repaid when the property is sold, typically on death or entry into long-term care
- Voluntary or interest repayments may be available, depending on the plan
Home Reversion Plan
You sell a share of your home rather than borrowing against it.
- Unlike a lifetime mortgage, you give up ownership of the portion sold, so that share will not benefit from any future rise in property value
- When the property is eventually sold, the provider receives their agreed percentage of the proceeds
Ways to receive the money
Lump sum
All funds are released at once.
- Interest begins accruing on the full amount from the outset, which may increase the total long-term cost
- Best suited to a specific, one-off need, such as repaying a mortgage or funding a major purchase
Drawdown
Funds are released in stages over time.
- Interest is typically charged only on money already released, which can help limit overall borrowing costs compared to a lump sum
- Additional funds can be drawn as needed, up to an agreed limit, subject to provider terms
Alternatives to equity release to compare
Equity release is not the only way to access money in later life. Before deciding, it is worth comparing whether another route could meet your needs with less long-term impact.
Downsizing
Selling your home and moving to a smaller or lower-cost property may release money without taking on a later-life mortgage. However, moving costs, property availability and emotional attachment to your home all matter.
Standard remortgage
Some borrowers may still be able to remortgage using a standard mortgage, depending on age, income, term, affordability and lender criteria.
Retirement interest-only mortgage
A retirement interest-only mortgage lets you pay the interest each month, with the loan usually repaid later when the property is sold. This can work for some borrowers with enough reliable income to support the payments.
Savings or other assets
Using savings, investments or other assets may reduce the need to borrow against your home. This needs careful thought, especially if those funds are needed for future income, emergencies or care.
Family support or wider planning
In some cases, it may be worth discussing family support, inheritance plans, later-life care planning or other financial routes before using equity release.
Benefits and trade-offs of equity release
Equity release can be useful, but it should be weighed carefully. The key is to check whether it supports your long-term plans, not just whether it gives you access to money now.
Potential benefits
Access money without moving
Equity release may allow you to use some of the value in your home while continuing to live there.
Reduce regular repayment pressure
Some lifetime mortgages do not require monthly repayments, which may help if you want to reduce regular outgoings in later life.
Support later-life plans
The money may be used for home improvements, adapting your property, supporting family or improving retirement flexibility.
Trade-offs to check
Interest can build up over time
If interest is added to the loan, the amount owed can grow and reduce the equity left in your home.
Inheritance may be reduced
Equity release can reduce the value of your estate and affect what you leave behind.
Benefits and future options may be affected
Releasing money may affect means-tested benefits, tax planning, future care choices and your ability to move home.
When to check equity release options
It is worth looking into equity release before pressure builds, not after. Reviewing your options early means you have time to weigh up alternatives properly and make a decision that suits your situation.
Scenario 1
Your current mortgage needs a plan
This may apply if your mortgage term is ending, your lender will not extend it, or your monthly repayments are becoming harder to manage.
Equity release could be one route to compare alongside other later-life mortgage options.
Scenario 2
You want to access money tied up in your home
You may want to fund home improvements, adapt your property for later life, help family financially or create more day-to-day flexibility.
Releasing equity could make this possible without needing to sell.
Scenario 3
You want to compare later-life options
Equity release is not the only route available.
It is worth weighing it up against downsizing, a standard remortgage, a retirement interest-only mortgage and other later-life lending options.
Reviewing things early gives you a clearer picture and more room to choose the right path.
How Muttuo Mortgages can help
Equity release is not just about how much money you could access. The right decision depends on your age, property, income, existing mortgage, long-term plans and how much equity you want to protect.
Muttuo Mortgages can help you:
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Compare equity release with other later-life mortgage options.
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Review whether a lifetime mortgage, RIO mortgage or remortgage could fit your plans.
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Understand how releasing equity could affect your borrowing, repayments and future choices.
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Check what lenders and providers may consider before you apply.
Whether you are reviewing an existing mortgage, planning later-life borrowing or comparing ways to access property wealth, Muttuo can help you understand what may be possible before you decide.
Ready to compare your later-life mortgage options?
See whether equity release, a retirement interest-only mortgage or another route could fit your property, income and future plans.
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Equity release FAQs
These FAQs answer common questions about equity release, including how it works, who it may suit, what lenders check and how it compares with other later-life mortgage options.
What is equity release?
Equity release is a way for some homeowners to access money from the value of their home.
The most common route is a lifetime mortgage, where you borrow money secured against your property while continuing to live there. The loan and any interest are usually repaid later, often when the property is sold.
How does equity release work?
Equity release allows you to access part of your property value without selling your home straight away.
With a lifetime mortgage, you still own the home. You may not need to make monthly repayments, but if interest is added to the loan, the amount owed can grow over time.
Who can get equity release?
Equity release is usually aimed at homeowners aged 55 or over.
Your options may depend on your age, property value, existing mortgage, property type, health, lender criteria and how much you want to release.
Is equity release the same as a lifetime mortgage?
Not exactly. A lifetime mortgage is one type of equity release.
The other main type is a home reversion plan. Lifetime mortgages are more common and involve borrowing against your home while keeping ownership of the property.
Is equity release a good idea?
Equity release can be useful in the right circumstances, but it is not right for everyone.
It may help you access money in later life, but it can reduce the equity in your home, affect inheritance and influence future options. You should compare alternatives before deciding.
What are the risks of equity release?
The main risks include interest building up, reduced inheritance, possible effects on means-tested benefits and less flexibility later.
You should also consider fees, early repayment charges, moving home rules and whether the product fits your future care or family plans.
Can I use equity release to repay my mortgage?
Some people use equity release to repay an existing mortgage.
However, this needs careful advice because the existing mortgage is usually repaid from the amount released, and the remaining cash available may be lower than expected.
Is equity release better than a retirement interest-only mortgage?
Not always. A retirement interest-only mortgage usually requires monthly interest payments, while some lifetime mortgages do not.
The better route depends on your income, age, equity, monthly budget, repayment plans and whether you want to reduce or avoid ongoing payments.
Can I move home after taking equity release?
Some lifetime mortgages may allow you to move home, but the new property will usually need to meet the provider’s criteria.
If the new property is not acceptable, you may need to repay the loan. Check moving home rules before taking out a plan.
Do I need advice before taking equity release?
Yes, equity release is a specialist later-life mortgage decision and advice is important.
An adviser can help you understand the risks, compare alternatives, review costs and check whether equity release is suitable for your circumstances.
