💬 What Is Equity Release?

Equity release is a way to unlock some of the money (equity) tied up in your home while still living in it.

You don’t have to move out. You can take the money as a lump sum or in smaller amounts over time. You usually don’t repay anything until you pass away or move into long-term care.

The money you receive is tax-free and can be used for anything, such as:

• Paying off debts
• Making home improvements
• Supporting your family
• Topping up retirement income

Important: You must be at least 55 years old and own your home.

🧠 What Is “Equity”?

Equity is the part of your home that you fully own.

Example:

• Your home is worth £250,000
• You owe £50,000 on your mortgage
• Your equity = £200,000

Equity release lets you borrow money using this equity — without needing to move.

🔍 What Are the Two Types of Equity Release?

There are two main types: lifetime mortgage and home reversion.

1. Lifetime Mortgage (Most Popular)

• You borrow money secured against your home
• You still own your home
• You usually make no monthly repayments
• Interest “rolls up” each year
• The loan is repaid when the home is sold

📌 Example:
Sandra, 65, releases £60,000 on a £300,000 home at 6% interest. After 15 years, the loan grows to about £144,000. This is repaid when the home is sold.

✅ Most lifetime mortgages include:

• No negative equity guarantee – You’ll never owe more than your home is worth
• Fixed interest rates
• Optional repayments to reduce the final balance

2. Home Reversion Plan

• You sell part or all of your home to a provider
• You no longer own that portion
• You live there rent-free for life
• When sold, the provider takes their share

📌 Example:
David, 70, sells 50% of his home for £40,000. When the home later sells for £200,000, the provider receives £100,000.

⚠️ Note: Home reversion usually pays below market value for the share you sell.

📉 How Does Equity Release Affect Your Inheritance?

• Lifetime mortgage interest grows over time, reducing the final inheritance.
• Home reversion reduces inheritance because you give up ownership.

✅ Many plans let you ring-fence a portion of your home’s value to protect some inheritance.

💡 Does It Affect Means-Tested Benefits?

Yes — releasing equity may affect eligibility for benefits like:

• Pension Credit
• Council Tax Reduction
• Universal Credit (if under pension age)

📌 Example:
Sarah, 68, receives Pension Credit. She releases £20,000. This may reduce her benefits until her savings fall below the threshold again.

✅ Tip: Speak to an adviser if you claim benefits — they can check the impact.

📅 When Is Equity Release a Good Option?

• You are asset-rich but cash-poor
• You don’t want to move
• You’re comfortable with repayment after death
• You have no dependants or supportive beneficiaries
• You’ve ruled out other borrowing options

❌ When Might It Not Be Right?

• If you’re under 60 and don’t urgently need funds
• If you want to move house soon
• If you want to leave your full home to children
• If you rely on means-tested benefits
• If downsizing could solve the problem

🧭 Alternatives to Equity Release

1. Downsizing

Sell your home and buy a smaller one — freeing cash with no interest.

2. Remortgaging

A new mortgage or further advance may work if you have stable income.

3. Family Support

Some families provide financial help with legal agreements.

4. Local Authority Grants

Councils may offer grants for repairs, insulation, adaptations.
👉 Use: gov.uk/improve-your-home

5. Use Savings or Pension Pots

Check existing savings or pension options before releasing equity.

🧑‍⚖️ Is It Safe?

Yes — if you use the right providers.

• Choose a lender in the Equity Release Council
• Use an FCA-regulated adviser specialising in equity release

💬 The adviser will explain costs, benefits impact, and all risks.

👉 Learn more at equityreleasecouncil.com

📌 Key Questions to Ask Your Adviser

• How much will the loan grow?
• Can I make repayments?
• Can I move in future?
• How does this affect my benefits?
• Can I protect inheritance?
• What are the total fees?