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Equity release mortgages
Compare equity release mortgages
To start exploring your Equity Release options, you’ll be introduced to Royal London Equity Release Advisers. They can provide personalised advice to help you understand your options.
Your home/property may be reposessed if you do not keep up repayments on your mortgage. The FCA does not regulate buy-to-let mortgages for commercial and investment properties.
What is equity release?
Equity release could help you access some of the value tied up in your home, while continuing to live there. It’s designed for UK homeowners aged 55 or over who may be looking for extra money in later life - whether that’s to improve their home, make a large purchase, or support family. You can usually take the money as a single lump sum or in smaller amounts over time, depending on what suits you. The loan is typically repaid when your home is sold, which is usually when you move into long-term care or pass away.
There are two main types of equity release:
Lifetime mortgage – The most common option. You borrow money secured against your home while retaining ownership. Interest is added to the loan and will increase over time.
Home reversion plan – A much less common option. You sell part or all of your home, usually below market value, in exchange for a lump sum or regular payments, while continuing to live there rent-free for life.
Equity release can provide flexibility and help to build finical resilience, but it’s not suitable for everyone. It’s important to understand the long-term impact and seek professional advice before making a decision.
How does equity release work?
Equity release could help you access some of the value tied up in your home, while continuing to live there. It’s for UK homeowners aged 55 or over.
In simple terms:
You unlock money from your home without having to move.
You can usually take it as a lump sum or in smaller amounts over time.
The loan is typically repaid when your home is sold, usually after you move into long- term care or pass away.
How much you can release depends on your age and your property’s value.
Lifetime mortgage
The most common type of equity release.
You borrow money secured against your home while keeping ownership.
Interest is added to the loan and will increase over time.
The loan, plus interest, is repaid when your home is sold.
Some plans let you make optional payments to help manage the cost
Home reversion plan
A much less common option.
You sell part or all of your home, usually below market value.
You can continue living there rent-free for life.
Things to consider
Equity release comes with costs that you should factor in:
Interest rates
Typically higher than standard mortgages and builds up over time.
Fees
May include advice, legal and valuation costs.
Inheritance
The amount you leave behind is likely to be reduced.
Benefits
Releasing cash could affect means-tested benefits.
How much could you release?
This will depend on your age and property value.
With a lifetime mortgage, the amount available is usually higher if you’re older.
Equity Release Council safeguards
Plans recommended by Royal London Equity Release Advisers follow Equity Release Council standards, which include:
No-negative-equity guarantee – You’ll never owe more than your home’s value when sold.
Clear protections to support fair outcomes for customers.
Alternatives to equity release
Remortgaging
Remortgaging – borrow against your home and make monthly repayments.
Accessing your pension
Using savings or pensions – including tax-free cash from your pension.
Downsizing
Downsizing – moving to a smaller home to release equity without borrowing.
Alternatives to equity release
Remortgaging
Accessing your pension
Using savings or pensions – including tax-free cash from your pension.
Downsizing
Downsizing – moving to a smaller home to release equity without borrowing.
Get expert advice
Equity release is a long-term commitment. Speaking to a specialist adviser can help you understand your options and decide what’s right for you.
Equity release FAQs
How risky are equity release mortgages?
Because the interest compounds, the debt grows rapidly. This means when the home is sold there may be no equity left – although some products allow you to ring-fence a percentage of the property value for your loved ones.
Choosing a property with a no negative equity guarantee, meanwhile, means you will never owe the equity release provider more than your property is worth.
Can I sell my house if I have an equity release mortgage?
Most equity release plans will allow you to move your mortgage to a new property if you decide to sell your house, as long as the new property meets the lender's criteria. However, you might end up paying early repayment charges, so it’s worth considering this when doing equity release comparisons.
Can I take out an equity release scheme if I’m under 55?
No, and you may need to be even older than that. The minimum age for equity release is 55, and this usually only applies to lifetime mortgages. For home reversion schemes, you typically need to be at least 65. With both types of schemes, you’ll also generally get better deals the older you are.
Will taking out an equity release mortgage affect my state benefits?
Yes, taking out a lifetime mortgage or using a home reversion plan can result in you losing means-tested benefits, including pension credit, council tax support and the Cold Weather Payment. This is because you will have more cash in savings and/or more income each month.
What happens on death with equity release mortgages?
When you die, any amount you owe to the equity release provider will need to be repaid within 12 months. Normally this can be done by selling the property, although your beneficiaries can also choose to pay off the loan and keep the property if they can afford to do that.
How do I pay interest on equity release?
There are two ways you can pay off equity release interest:
1. Deferring interest on equity release
If you take out a lifetime mortgage and choose to roll up the interest, it compounds and then is paid when the house is sold. In other words, the amount you owe will essentially double every 15 years. This is a reason to be cautious of lifetime mortgages if you hope to leave a good inheritance for your family.
2 . Paying off equity release interest as you go
You can choose to pay off the interest on the mortgage as you go which avoids the risk of compounding. You can also take income over time instead of a big upfront lump sum, which means the amount you owe less interest in the end.
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