Equity release explained
Explore the pros and cons of equity release at the Equity Release Report and find the answers to the most frequently asked questions to help you decide if it is right for you
The Equity Release Report aims to provide free, impartial and unbiased information to anybody who is interested in equity release.
Why the Equity Release Report?
First of all, we’re not here to sell you anything – or collect your contact details.
Our aim is to declutter the equity release landscape by providing relevant and useful information in an easy-to-understand format.
If we provide information then we do it because we think it will help you – the consumer.
The Equity Release Report is not commercially affiliated with any provider, broker, financial adviser, or solicitor.
Where are you on your equity release journey?
I’m new to equity release
What is equity release?
Equity release is the name of a group of financial products specifically designed for UK homeowners aged 55 and older, with little or no mortgage left to pay. There are two types of equity release; lifetime mortgages and home reversion.
Read our full report where we fully explain what is equity release and how does it work.
How does equity release work?
Essentially equity release allows eligible homeowners the option of unlocking a percentage of the value in their homes in exchange for money, without having to move or make any monthly repayments.
Watch our introduction video
I want to explore more about equity release
Types of equity release
There are two main types of equity release; lifetime mortgages and home reversion. Read our guides below for an in-depth analysis of each
Enhanced Equity Release
How much does equity release cost?
There are numerous costs involved when taking out an equity release plan including solicitor’s fees, application fee and sometimes a valuation fee
Costs & interest rates
How long does it take?
You can expect a normal equity release application to take between 8 to 12 weeks from starting your application to receiving your money
Can anybody apply?
No, in order to qualify for equity release you (or the youngest homeowner) must be at least 55 years old, your home worth a minimum of £75,000 with little to no mortgage left, and be your main residence and in the UK
Is equity release safe?
Yes, equity release is safe if you deal with Equity Release Council member advisers, brokers, and providers. The product standards enforced by the ERC offer you many safeguards and protection
Read our full report here
The Equity Release Council
Financial Conduct Authority
Where can I get equity release?
Ultimately you will get equity release from an approved lender, but you might start your application through an introducer, a broker, or from a financial adviser
Providers & companies
How much equity can I release?
The amount you can get depends on many factors including your age, health, lifestyle, property value, and even its location. Each lender has their own criteria. You can ask for a personalised quote from a broker
Try our free calculator
Can I sell my house if I get equity release?
You can most certainly still remain living in your house but in order to sell it you may have to settle the original equity release plan and even pay an early repayment charge. Each lender has different criteria so it is best to ask your financial adviser to check for these clauses beforehand
Where to find advice?
I’m ready to release equity
I’d like to switch equity release plans – is this possible?
Yes, it is possible to switch your equity release plan to the same or a different lender. You might benefit from more competitive rates, and be able to release more money if your house value has changed.
You would need to speak with a qualified adviser about any terms and conditions and if you would have to pay any early repayment fees first, however.
We should also point out that the current rates for equity release are quite high so you need to consider that first.
Frequently Asked Questions
What is the catch with equity release?
The “catch” with equity release is that the money you release from your property, along with the interest, will need to be repaid after you die or move into long-term care.
Can I sell my house if I have equity release?
Yes, you can sell your house if you have equity release. So long as the new house meets the lender’s eligibility criteria. Moving house may involve you having to settle the existing equity release first and you could be liable for an early repayment charge.
Can I use equity release to buy a second home?
Yes, it’s possible to release equity to buy a second home by unlocking money tied up in your main one. This could be a good idea if your current home has substantially increased in value and the second home is of less value than the amount of equity you want to release. Although, if you do use equity release to buy a second home, you’ll still need to live in your main home for at least six months of the year. There could also be stamp duty to pay so you will need to ask your financial advisor for advice on this.
Can you use equity release for buy-to-let properties?
Yes, it’s possible to release equity on a buy-to-let property without having to sell it. This could be a good idea if you want a tax-free lump sum to spend however you wish. Although, if you do use equity release on a buy-to-let property, you’ll still need to live in your main home for at least six months of the year. There could also be stamp duty to pay so you will need to ask your financial advisor for advice on this.
Can I release equity for home improvements?
Yes, you can release equity in your home and use it for home improvements. This is one of the most popular uses for equity release and can actually increase the value of your property as a result.
Can you pay back equity release?
Yes, you can pay back equity release. Any plan approved by the Equity Release Council allows you to make voluntary repayments, and most lenders will allow you to repay up to 10% of the amount borrowed each year without you incurring any early repayment charges.
How does equity release affect inheritance tax?
Equity release reduces the value of your estate, so when you die the amount of money used from the sale of your property to repay the equity release is deducted from the value of your estate and is not subject to inheritance tax.
Can I use equity release to pay off my mortgage?
Yes, equity release can be used to pay off your mortgage and other debts. You will be required to pay off any debts secured against your home before you can release equity. It might be helpful if you use our free equity release calculator to get an estimate of how much could release first.
How does equity release work when you die?
When you die your beneficiaries usually have up to 12 months to repay your equity release debt. This will normally involve the executor of your estate selling your property and using the proceeds to settle the equity release plan. Although your beneficiaries may be able to use other sources of finance to settle the debt if they wish to keep the property. They would need to discuss this option directly with the lender.
Can you get equity release on a leasehold property?
Yes, you can get equity release on a leasehold property whether it is a house or a flat. That is provided you meet the eligibility criteria set out by the lender. These may include the time remaining on your lease, if you pay any ground rent, any service charges payable, and also your building insurance.
Can I rent out my house if I have equity release on it?
No, once you have taken out equity release on your home you are unable to rent it out. However, you can have a lodger. This is because there is a legal difference between a lodger and a tenant. Tenants have certain rights to protect them which makes equity release difficult, whereas lodgers share your home with you.
What does Martin Lewis think of equity release?
Everyone’s favourite money guru Martin Lewis from Money Saving Expert obviously has an opinion on equity release. He believes that equity release is risky but can be a good idea if you have considered other options first such as downsizing, you are not concerned with the value of your estate after you die and you are aware that releasing equity can affect your eligibility for benefits. Martin Lewis has also said that if you do decide to proceed with equity release then you should not borrow more than what you need, make sure the provider is a member of the Equity Release Council. You can read Martin Lewis’ full thoughts on equity release here.
So, you’ve decided that equity release is the right option for you?
Let us show you today’s best equity release deals from around the web*
*We are not affiliated with any provider or broker and do not earn any commission from them. Any deals or rates we display are for your information only in order to help you find the best equity release deal.