Founder:
Expert VerifiedKey Takeaways
- Equity release allows homeowners aged 55 and over to access the equity tied up in their property without needing to sell or move out.
- There are two main types: lifetime mortgages, which involve taking out a loan secured against your home, and home reversion plans, where you sell a part or all of your home.
- The money received can be taken as a lump sum, regular payments, or a combination of both and is tax-free.
- Products from members of the ERC come with a no negative equity guarantee, ensuring you never owe more than your home's value.
- The interest on a lifetime mortgage is typically rolled up, meaning it compounds over time, increasing the total amount to be repaid.
Equity release is growing in popularity across the UK, especially among homeowners looking to boost their retirement income.
But with so many myths and misunderstandings around, it’s important to get clear, accurate facts before making any decisions.
Whether you're considering equity release for yourself or helping a family member, this guide covers the 14 essential facts you must know.
Knowing these key points can help you decide whether equity release is the right solution for your financial future.
This article explores the following topics, drawing on our expertise in the field:
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- Who offers the LOWEST rates available on the market.
- Who offers the HIGHEST release amount.
- If you qualify for equity release.
1. Equity Release Allows You to Access Money Tied Up in Your Home
Equity release lets you unlock cash from the value of your property without having to sell it.
You continue to live in your home while receiving a lump sum, regular income, or both.
2. Two Main Types Exist: Lifetime Mortgages and Home Reversion Plans
- Lifetime Mortgage: You borrow against your home’s value but keep ownership.
- Home Reversion: You sell part or all of your home in exchange for a lump sum or income while staying rent-free.
Lifetime mortgages are by far the most common choice today.
3. You Must Be at Least 55 Years Old to Apply
Most providers require applicants to be 55 or older for a lifetime mortgage and sometimes 60 or older for a home reversion plan.
4. You Don’t Have to Make Monthly Repayments (Unless You Want To)
With most lifetime mortgages, you aren’t required to make repayments.
Instead, the loan plus interest is repaid when you die or move into long-term care.
Some plans do allow voluntary payments to reduce the final amount owed.
5. Interest Can Compound Quickly
If you don’t make any repayments, interest is added to the loan over time — this is called compound interest.
It can significantly increase the amount owed unless you opt for an interest payment plan.
6. Equity Release Can Affect Means-Tested Benefits
Taking a large cash lump sum could affect your eligibility for state benefits like Pension Credit or Council Tax Reduction.
Always check with an adviser first.
7. You’ll Need to Take Independent Legal Advice
It’s a legal requirement to receive independent legal advice before completing an equity release agreement.
This protects your rights and ensures you fully understand the contract.
8. Modern Equity Release Is Safer Than Before
Thanks to the Equity Release Council, today’s products include protections like:
- The right to stay in your home for life.
- A “no negative equity guarantee” (you'll never owe more than your home's value).
9. Equity Release May Limit Your Future Choices
Taking out equity release could reduce your options if you want to move home, help children financially, or need further borrowing later.
Careful planning is crucial.
10. You Can Still Move House
Many equity release plans are portable, meaning you can move and transfer the loan to a new home (subject to provider approval and property suitability).
11. It Will Reduce the Value of Your Estate
When you take equity release, the amount owed (loan + interest) is repaid from the sale of your home after death or moving into care.
This leaves less inheritance for your beneficiaries.
12. There Are Fees to Pay
Typical costs include:
- Adviser fees
- Valuation fees
- Legal fees
- Arrangement fees
Always ask for a full breakdown before proceeding.
13. You Should Always Use an FCA-Authorised Adviser
Only work with a Financial Conduct Authority (FCA)-authorised adviser who is ideally also a member of the Equity Release Council.
This ensures higher standards of advice and customer protection.
14. Alternatives Might Be Better for Some
Equity release isn’t the only way to unlock money in later life.
Other options include:
- Downsizing
- Personal loans
- Pension drawdowns
- Family support
A good adviser should explore all alternatives with you before recommending equity release.
Common Questions
How much can I borrow with equity release?
Can I repay my equity release loan early?
Will I still own my home with equity release?
Can I protect some of my home’s value for my family?
Is equity release taxable?
Conclusion
Equity release can be a lifeline for many, offering financial freedom in retirement.
However, it’s not a decision to take lightly.
Understanding the top 14 facts about equity release ensures you approach it with clarity, confidence, and caution.
Seek trusted, regulated advice, ask lots of questions, and make sure you find the best solution for your needs — not just for today but for your future too.
