Equity Release

Discover: What Is Equity Release & How Does It Work?

Your Guide to Equity Release. Is It Right for You & Could It Unlock the Key to Your Retirement Dreams? Property Owners Over 55: Discover More Now!

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What’s Equity Release & How Does It Work?

This key information could change the way you perceive retirement!

What’s Equity Release?

Equity release is the use of financial arrangements that provide owners with funds derived from the value their property while enabling them to continue using it.

Retirement could come sooner than you think. Act fast before you have no money to relax in your golden years. Learn how to get your share of equity release!

We’ll help you discover:
• To trick to unlocking equity the right way
• A comprehensive introduction to equity release
• The types of equity release you can consider
• How exactly equity release works

Our professional team continuously researches the latest innovations in equity release and updates our website with easy-to-understand content.

Equity release might be the answer you’ve been looking for. Let’s find out right now!

How Exactly Does Equity Release Work?

Simply put, an equity release is a UK product that allows you to unlock the cash tied into your home, with no payments required in your lifetime. Instead, the loan, plus interest, is repaid from the sale of your home when you pass away or move into permanent care.

If you’re a homeowner over the age of 55, you could qualify for an equity release scheme. The age of the youngest homeowner will be a determining factor for qualification. In addition, some lenders or plans could require you to be at least 60 or 65.

What’s fantastic about equity release is that you can opt to unlock the cash through a lump sum, a drawdown, a regular salary, or a combination.

Your financial adviser is the person to turn to when starting your equity release journey.

Equity Release

6 Types of Arrangements

Lifetime Mortgage

A lifetime mortgage is a loan you’ll take against the value of your property. The loan, plus interest, is repaid, generally from the sale of your home, when you pass away or move into permanent care. There’s no wonder that this convenient option is the most common form of equity release.

Interest-Only Mortgage

With an interest-only lifetime mortgage, you’ll make monthly interest repayments, reducing the amount of compound interest. Like a traditional lifetime mortgage, the loan amount is repaid when you die or enter long-term care.

Retirement Interest-Only Mortgage (RIO’s)

An RIO is an interest-only mortgage that’s designed for homeowners over 55. It differs from your traditional equity release in that you’ll be obligated to make monthly interest repayments. Therefore, a credit check will be required. The loan is, once again, paid upon your death or move into a care facility.

Home Reversion

What’s unique about a home reversion scheme is that you’ll sell all or a percentage of your home to an equity release lender. In return, you’ll get cash in the form of a lump sum or monthly salary payments. The lender will then get their portion of your estate when the home is eventually sold.

It’s a great way to sell your home, but remain living there. However, it’s vital to note that you’ll only receive a percentage of the value of your estate.

Shared Appreciation Mortgage

With a shared appreciation mortgage, You’ll access a capital sum in return for some of the property’s future value growth. In return, you’ll have the opportunity to live in your home until you pass away. The share percentage will be determined by your and your partner’s age.

Shared appreciation mortgages are no longer available in the UK.

Home Income Plan

A home income plan is a type of lifetime mortgage where the capital gives you a monthly income by purchasing an annuity provided by the lender. These plans will usually be available through insurance companies.

2 Main Types of Equity Release Products

The 2 main types of equity release are a lifetime mortgage and a home reversion scheme. While a lifetime mortgage is a more popular option, it’s vital to be aware of both types of plans to make the best decision for you and your family.

What’s a Lifetime Mortgage?

A lifetime mortgage is a type of later-life mortgage loan that’s secured against the value of your estate. You’ll unlock the cash, while retaining 100% ownership of your estate.

What’s great about a lifetime mortgage is that you’re under no obligation to make any repayments in your lifetime. Instead, you can stay in your home, and the loan, plus interest, is only repaid when you die or relocate to long-term care. This is usually through the repayment of your home. Any additional cash balance will go to your heirs.

While you’re not obligated to make repayments, some plans allow you to make capital or interest repayments. This means that you can stop the interest from compounding and leave your family with more inheritance.

Several flexible options allow:

  • Monthly or adhoc mortgage repayments.
  • The option for inheritance protection allows you to keep aside a guaranteed portion of your estate for your heirs. This way, a smaller percentage of your estate will be available to unlock.
  • A drawdown facility that allows you to unlock cash whenever you wish. There is usually a minimum withdraw option, and you only pay interest on the equity you’ve withdrawn.
  • Downsizing protection and compassionate early repayments are a great way to prevent early repayment charges.
  • If you suffer from a health or lifestyle condition, you can unlock more cash with an enhanced lifetime mortgage.

What’s a Home Reversion Scheme?

Home reversion schemes are available for homeowners who are over the age of 65. All or a percentage of your home is purchased by your lender, in exchange for tax-free cash.
You’re allowed to stay in your home, rent-free, for the rest of your life.

The lender’s amount is repaid from the sale of your home when you pass away or move into permanent care.

If your home increases in value by the time it’s sold, your beneficiaries will receive the balance.

In addition, you’ll know exactly what percentage of your home will be left to your estate.

Let's Break It Down Slowly

How Does Equity Release Get Repaid?

The greatest benefit of an equity release mortgage is that you’re under no obligation to make any loan or interest repayments during the course of your life.

You have the option to repay some of the loan, plus interest, should you suddenly be in a position to do so, or wish to reduce the amount owed at the end of the loan’s lifespan.

Your equity release will generally be repaid from the sale of your home. However, should your family wish to keep the property and have the means to do so, the loan can be repaid using an alternative source of income.

Equity release is a fully regulated market, and legitimate lenders will offer plans with a ‘no negative equity guarantee.’ This means that when you die or move into long-term care, your heirs won’t owe more than the total value of your property, even if prices plummet.

Is Equity Release the Next Best Thing

What Can Equity Release Cash Be Used For?

What’s wonderful about equity release is that you can use the tax-free cash in any way you wish.

You can opt for a lump sum, drawdown facility, the combination of the 2, or a monthly income, like a salary.

In addition, there’s no limitation as to how you spend the money. Whether you want to go on a dream holiday, renovate your home, or simply supplement your income, the choice is yours.

Where Will I Live With an Equity Release Mortgage?

Great news!

With an equity release mortgage, you can remain in your home until you pass away or move into permanent care.

While you should plan to remain in your house with equity release, life doesn’t always go as planned. You can transfer your plan if you move house, as long as the new property meets the lender’s criteria.

The only time you’ll be eligible for early repayment charges is if you cancel the plan outright.

4 Equity Release Eligibility Criteria

You’ll be required to meet the following criteria to be eligible for an equity release plan:

  • You should be 55 or older, but in some cases, 60+.
  • If you co-own your home, the youngest owner must be at least 55.
  • You’ll need to own a home valued at £70,000 or more.
  • You’ll either need to own your home outright or have a small mortgage remaining.
Understanding The Application Process

Are There Equity Release Alternatives?

While equity release is a fantastic option to consider, you should discuss all the alternatives with your independent financial adviser.

Some options include:

  • Downsizing
  • Renting out a room in your home
  • Opening a business
  • Looking at alternative loan options
  • Borrowing from friends or family

Pro Tip: Don’t shy away from accessing sound financial advice from a professional. Seeking assistance with your money will save you in the long run.

How Does an Equity Release Calculator Work?

An equity release calculator is designed to give you an estimate of the amount of cash you could be eligible to unlock. The calculation is based on your age and your property’s value.

While each case is different and a professional valuator will determine your property value, the calculator will give you a rough idea of what you might be eligible to unlock.

It’s a great first step on your equity release journey.

How Exactly Does Equity Release Work

Why Using an Equity Release Calculator Is a Must

Did you know that 1 in 5 people who release equity will end up regretting their decision? However, don’t be put off by these statistics. Research confirms that these individuals unlocked equity in haste, without doing the proper research.

Have You Considered Downsizing

Common Questions

Could This Type of Scheme Help Me Reduce Any Inheritance Tax?

What Are the Alternatives to Equity Release?

Is Equity Release Right for Me?

What Types of Equity Release Are There?

What's Equity Release?

Are You Able to Take Out an Equity Release Mortgage on a Property That Has a Trust Registered Against It?

In Conclusion

Equity release can truly be a life-changing way to retire with financial confidence. However, don’t make a hasty decision. Be sure to do your proper research, learn about your options, and speak to a professional financial adviser.

In addition, unlocking the cash tied into your home will affect your entire family. Therefore, you should discuss your options with your loved ones and consider all the equity release alternatives.

Once you’re fully educated on all things equity release, you can then unlock cash with confidence, giving you the financially stress-free retirement of your dreams.

Learn more:

What people say

Thanks! What a great service! Your guide was incredibly in-depth, informative and very helpful. Definitely an eye-opener for me!
George Duran
I'd like to commend the excellent support we received from you guys in our recent equity release journey. You answered our questions, gave us lots to think about and provided some fantastic info.
Thomas Greer
What a fantastic experience. You've spent a ton of time working on providing the information in an easy to follow format. Thanks for taking the time to assist.
Jordy Boyd

Editorial Note: This content has been independently collected by the EveryInvestor advisor team and is offered on a non-advised basis. EveryInvestor may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations. Learn more about our editorial guidelines.

How Much Can You Release?

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Value of Your Home?


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It's VERY FAST, takes just 8 seconds

Now, compare and save: Search over 200 equity release council approved plans and find the best deal for the amount of money that you need.

Equity Release

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Most people are using equity release as a means of retaining the use of their house while also obtaining a lump sum or a steady stream of income. Get matched with an expert and check your eligibility for equity release options.

Use our free equity release calculator & see how much you can release today.

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