For many UK homeowners aged 55 and over, the largest portion of their wealth is tied up in their property. Equity release provides a way to access that wealth without having to sell your home or move out. However, it is a major financial decision that can affect your inheritance, your entitlement to means-tested benefits, and the total amount of interest you pay over time. This guide explains exactly how equity release works so you can decide whether it is the right option for your circumstances.
What Is Equity Release?
Equity release is a financial product that allows homeowners typically aged 55 or over to access some of the value (equity) locked in their property. You continue to live in your home for the rest of your life or until you move into long-term care. The loan, plus any accumulated interest, is repaid when the property is eventually sold. There are two main types: lifetime mortgages and home reversion plans. Lifetime mortgages are by far the most popular, accounting for over 99% of all equity release plans sold in the UK.
Lifetime Mortgages vs Home Reversion
With a lifetime mortgage, you borrow a lump sum or series of smaller amounts secured against your home. Interest is charged on the loan, and unless you choose to make repayments, it rolls up (compounds) over time. With a home reversion plan, you sell part or all of your property to a provider in exchange for a lump sum or regular payments. You retain the right to live in the property rent-free for life, but you no longer own 100% of it. The amount you receive is always less than the market value of the share you sell.
How Much Can You Release?
The amount you can release depends on your age, the value of your property, and your health. As a general rule, the older you are, the higher the percentage you can borrow. A 55-year-old might release around 20–25% of their property value, while someone aged 80 could potentially release 45–55%. If you have certain health conditions, you may qualify for an enhanced plan that offers a higher sum. The average amount released in the UK in 2025 was approximately £105,000.
Costs, Risks and Protections
The main risk is the compounding of interest, which can significantly reduce the value of your estate over time. For example, a £50,000 loan at 5% interest would grow to over £81,000 after 10 years if no repayments are made. All plans sold through members of the Equity Release Council come with a no-negative-equity guarantee, meaning you (or your estate) will never owe more than the value of your home. The Financial Conduct Authority (FCA) regulates all equity release advice, and you are required to receive independent legal advice before proceeding.
Is Equity Release Right for You?
Equity release is not suitable for everyone. It is essential to consider alternatives first, such as downsizing, using savings, or claiming benefits you may be entitled to. If you have dependants living in your home, or if leaving a full inheritance is important to you, equity release may not align with your goals. A qualified equity release adviser can model different scenarios and show you the long-term impact on your estate.
Key Takeaways
- Equity release lets over-55 homeowners access property wealth without moving.
- Lifetime mortgages are the most common type, accounting for 99%+ of plans sold.
- Rolled-up interest can significantly reduce the value of your estate over time.
- The no-negative-equity guarantee ensures you never owe more than your home is worth.
- Independent financial and legal advice is required before completing a plan.
Frequently Asked Questions
What is the minimum age for equity release?
You typically need to be at least 55 years old, though some providers set the minimum age at 60.
Will equity release affect my state pension?
It will not affect your state pension, but releasing a large lump sum could affect means-tested benefits such as Pension Credit or Council Tax Reduction.
Can I make repayments on a lifetime mortgage?
Many modern plans allow voluntary repayments of up to 10% of the original loan per year, which helps control the build-up of interest.
Written by
James Whitfield
CeMAP, Equity Release Adviser
This guide has been written and fact-checked by a qualified professional to ensure accuracy. All information is regularly reviewed and updated. Wisehande editorial standards require expert authorship and peer review for every guide we publish.
