*Updated April 2024*
What is equity release?
Equity release is a way of accessing some of the cash tied up in your home - the 'equity'. The equity in your home is the difference between the value of your property and any loans you have against it. For example, if your property is worth £250,000 and you have a mortgage of £50,000, your equity (what you own) would be £200,000.
In this guide we explain all you need to know about what equity release is and how it works. Releasing equity has become a major part of later life financial planning for many UK households. Those looking for extra cash are now turning to their home to provide financial support and a more comfortable lifestyle for them and their family. The amount you can release will depend on the value of your home and your age.
How does equity release work?
Equity release enables UK homeowners aged over 55 to unlock some of the money tied up in their home without having to move. The amount of equity you can access is based on your age and the value of your home. Depending on which product you choose, you can receive the cash either as a one-off lump sum, or as an initial lump sum followed by smaller amounts.
The cash you release is tax-free and can be used for anything you want – from home improvements to fulfilling lifelong dreams and helping your family. Equity release can be used to pay off loans and give you some extra money to enjoy your retirement.
What types of equity release are there?
There are two types of equity release to choose from:
- Lifetime mortgage – This is a loan secured against your home that is repaid once you die or go into long-term care and your home is sold. A lifetime mortgage is the more popular form of equity release. You will have to be 55 or over to take out a lifetime mortgage.
- Home reversion scheme – This is an agreement where you sell part or all of your property to the scheme provider in exchange for a tax-free cash sum. You remain living in your property rent free for life or until you go into care. A home reversion plan is available to those aged 60+.
There may be alternative ways to access funds that could be more appropriate for you. A professional financial adviser can help you decide whether equity release is right for you and if so, which plan might best suits your needs.
What's the difference between equity release and a lifetime mortgage?
A lifetime mortgage is one of two types of equity release that lets homeowners access the money tied up in their property, whilst retaining full ownership of their home. This is different to a home reversion plan, which is other type of equity release where part or all of your home is sold.
We specialise in later life planning and have put together clear, expert information to help you make a more informed decision on how equity release works and whether it is right for you.
Find out more about the two types of equity release.
Find out more about who is eligible for equity release.
How much will it cost to release equity on your property?
Find out how much you could release.
How regulations and safeguarding ensure equity release is safe?
Our expert helps you weigh up the benefits and risks.
A look at the lowest rates available.
How much tax-free cash could you unlock?
A look at borrowing options for the over 55's.
How long does it take to release equity from my house?
It usually takes around 6 to 8 weeks to release equity from your home, from making your application to receiving the money.
Time frames for arranging a home reversion plan are similar, but it can take a little longer. You should also allow for some time to take advice from an equity release adviser who will talk through your requirements and give you details of the most suitable equity release schemes for you.
Is equity release right for you?
Unlocking some of the cash tied up in your home can make a big difference to you in later life. However, equity release is not for everyone. Make sure you consider all possible alternatives and weigh up the pros and cons carefully.