Updated Date: 2nd November 2020

Equity release refers to products that let you access the cash (equity) tied up in your home. An equity release mortgage is when you use the value of your home to generate a cash lump sum, or a regular income. It's only available to older homeowners.

How does equity release work?

The money or equity you have tied up in your property can be converted into a tax-free cash lump sum or monthly income. You'll sometimes hear it being called an equity release loan or a home or house equity release loan.

With a home equity release mortgage, you're withdrawing money from the value of your home, but you don't have to move or sell your property. Often you don't even need to pay back mortgage interest while you're still living there.

Is equity release a good idea?

Property equity release can be helpful to people aged 55 and over, who've paid off their mortgage. Perhaps you'd like the extra money to boost your pension or standard of living, but you don't want to move out of the family home.

If you're wondering 'how much equity can I release?' then you can use an equity release calculator to work out how much cash you can free up from your property.

Can I take out equity release under 55?

The minimum age for equity release is 55. It is not usually possible to take out equity release under 55.

Learn more about equity release schemes.

How much equity release can I get from my property?

An equity release calculator is a tool you can use to work out how much tax-free cash you can free up from your property. If you don't know how much house equity you have, there are home valuation tools you can use online.

It can also show you useful information about your specific situation. It could help you decide whether equity release on property is something you'd like to go ahead with or not. A lifetime mortgage calculator does the same thing.

What types of equity loans are there?

There are two main types of property equity release mortgage loans.

A lifetime mortgage is when you get a lump sum secured against your home. It's paid back, with interest, when your home is sold. With a lifetime mortgage, you still own all of your home. The interest continues to go up until your property is sold. Most people who take out equity release use a lifetime mortgage.

A home reversion mortgage is when you sell all or part of your home to a provider, in return for a lump sum or monthly income. You'll be able to continue living in your home - rent free - for the rest of your life. At the end of the plan, the property is sold and the proceeds are divided according to the remaining proportions of ownership. This type of equity release scheme is often limited to over 65s.

With both of these options you can choose to 'ring fence' a proportion of the property's value for later use, such as for your family's inheritance.

Find out more about lifetime mortgages and home reversion schemes

Am I eligible for an equity release mortgage?

This depends on your situation as equity release companies have different criteria.

In general, you will need to:

  • Own your own home, usually with no outstanding mortgage

  • Be 55 years old or more, but some schemes have a higher minimum age

  • Ensure your home is in good condition.

Find out who can use equity release schemes to see if you're eligible.

How to find the best equity release interest rates

If you're looking to compare equity release mortgages and find the best interest rates on equity release, use our equity release comparison table above. It shows you the size of the loan you can get, the loan to value (LTV) ratio and the best equity release interest rates.

You'll be able to see the mortgage products you are eligible for and the best equity release rates available. Once you've decided, click 'check eligibility' and complete the enquiry form. You'll then be contacted by a mortgage adviser who will ask about your financial situation and discuss your options.

There are different types of equity release schemes. The type you should choose depends on your personal financial situation.

What are the pitfalls of equity release?

If you're wondering 'Is equity release good or bad?' then that depends on your particular situation. Equity release mortgages are certainly a lot more complex than ordinary repayment mortgages and you should proceed with caution, ensuring you fully understand what the costs will be before signing up.

Some of the disadvantages include:

  • If you're releasing equity from your home then it means your family won't inherit all of it. Instead, the equity release company may end up owning some or all of the property.

  • There are several costs that come with equity release and this can affect the benefits you receive.

  • If you take out an equity release mortgage when you're 55, and then live until you're in your eighties or older, you'd incur a big debt over the years. If you're hoping to pass on your home to your family or heirs, this is worth thinking about.

Read more about the benefits and risks of equity release.

Can I sell my house if I have equity release?

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, depending on how much the new property costs, you might end up paying early repayment charges.

How much does equity release cost?

There are several equity release costs to be aware of and this can affect the benefits you receive such as pension credit and universal credit.

  • Interest on equity release. When you're comparing deals, watch out for the equity release rates. You should be looking for a deal that's fixed or capped for the lifetime of the equity loan. With lifetime mortgage rates you can avoid any nasty surprises if interest rates rise.

  • A no negative equity guarantee. A good equity release loan should have a 'no negative equity guarantee'. This means your family won't have to pay back more than the value of your property when it's sold after you've died.

  • Interest payments. Check whether your equity loan lets you repay some of the interest as you go along. In the long run, this makes the cost of equity release lower overall.

  • Minimum withdrawal sum. See if there's a minimum sum you can withdraw each month, or a minimum lump sum. This will help you work out the total cost of what you're paying to access your equity.

  • Regulated companies and schemes. When you're looking at equity release plans or companies, look for schemes that are approved by the Equity Release Council (ERC). Also look for equity release providers that are regulated by the FCA (Financial Conduct Authority). You can check their register to find out.

How do I find the best equity release rates?

With our equity loan comparison table at the top of this page, you can look at the best products for equity release, UK wide.

Compare interest rates on equity release and maximum LTV to find the best equity release deals.

If you click 'check eligibility' you can also see if you're suitable for the loan. And you can get quotes from equity release advisers who could give you expert equity release advice.

It's very important that you understand the features and risks of different equity release loan products. This will help you ensure you're getting an appropriate equity release mortgage for your financial situation.

How can I get equity release advice?

There's a lot to think about if you are considering releasing equity from home.

You may even be wondering, is equity release safe? If it all seems a little daunting or if you wish to ensure you are making the right decision, it can be well worth paying for some equity release advice.

A specialist equity release mortgage broker or independent financial advisor (IFA) can talk to you about the process and cost of equity release. They can also help you decide 'is equity release a good thing?' for you and your circumstances.

It's a good idea to use equity release advisers for this kind of product, to make sure you fully understand what you're doing. You need to be clear about the effect that this type of mortgage will have on the equity you hold in your home. You'll also need to look at the amount of equity that you'll be able to pass onto your family.

If you do decide to go ahead, an adviser can recommend which they believe is the best equity release company for you, as well as which to avoid.

Use our enquiry form to get a personalised mortgage quotation.

Alternatives to equity release

If you are under 55, you won't be eligible for equity release. But, if you'd like to access some of the equity in your home, you could sell your home and move to a smaller, cheaper property to free up some cash. Or you could consider remortgaging to release equity.

Remortgaging to release equity


Another way you can access the money in your home is by doing a remortgage to release equity. This isn't the same as an equity release mortgage.

With a remortgage to release equity, you're taking out a lump sum from your property and paying interest on the amount that's outstanding.

You'll usually have the option to repay the loan in full or make additional repayment contributions.

When you remortgage to release equity, if you keep up the repayments and pay off your mortgage in full, the lender has no right to a share in your home.

However, a remortgage to release equity may not be an option for some older people. Have a look at our remortgage comparison page to see the deals on offer.

Equity release FAQs

Q

Should I get financial advice?

A

You can get advice and a lifetime mortgage quote from a broker. You can decide what option is best by contacting an independent financial adviser.

Q

What are the alternatives to equity release?

A

You could raise money by moving to a smaller home, or getting a loan. A financial adviser could help you decide.

Q

How much can I get from equity release?

A

This can depend on your age, your property's value, the equity release scheme you use and how much equity you sell.

About our mortgage comparison

Q

Who do we include in this comparison?

A

We include mortgages available through our independent broker, Responsible Equity Release. They are all from lenders regulated by the Financial Conduct Authority. Here is more information about how our website works.

Q

How do we make money from our comparison?

A

We have commercial agreements with some of the companies in this comparison and get paid commission if we help you take out one of their products or services. Find out more here.
You do not pay any extra and the deal you get is not affected.