What Is Equity Release?
Equity release lets homeowners aged 55 or over access tax-free cash from their property without selling or moving out. The money is secured against the value of the home and repaid — usually from the sale of the property — when the homeowner dies or moves into long-term care. It is a regulated product and most plans from recognised providers come with a no negative equity guarantee.
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What does “releasing equity” mean?
Your home has equity: the difference between its current market value and any outstanding mortgage on it. A property worth £350,000 with a £50,000 mortgage outstanding has £300,000 of equity. Equity release products allow you to unlock a portion of that equity as cash — while continuing to live in the property.
Most people who have owned their home for many years are in a position sometimes described as “asset-rich but cash-poor”: their property represents substantial wealth, but that wealth is not accessible as income or day-to-day cash. Equity release is one way to bridge that gap without having to sell the home.
The amount you can release depends on your age, your property value, and the lender. The older you are, the more you can typically borrow. See our guide to how much you can release from your home.
Use our calculator to see how much you could release →
The two types of equity release
There are two distinct products available in the UK. They work differently and suit different situations.
Lifetime mortgage
The most common form of equity release. A loan is secured against your property — you retain full ownership. There are typically no monthly repayments; instead, interest compounds and is added to the loan balance over time. The total amount (original loan plus rolled-up interest) is repaid when the property is sold, which usually happens when the last homeowner dies or moves permanently into care.
Most lifetime mortgages come with a no negative equity guarantee — meaning you can never owe more than the value of your home, regardless of how long the loan runs or how interest compounds. See our guide to what a no negative equity guarantee means.
Lifetime mortgages are available from age 55.
Home reversion plan
A home reversion plan works differently. You sell a percentage of your property to a provider in exchange for a tax-free lump sum or regular income. You retain the right to live in the property rent-free for the rest of your life. When the property is eventually sold, the provider takes their agreed share of the proceeds.
Because you are selling a share at below market value — the provider accepts a discount in exchange for giving you the right to live there indefinitely — home reversion plans often return less cash than a lifetime mortgage for the same property value. They are available from age 65 with most providers.
For a full comparison, see our guide to types of equity release.
How is equity release different from a standard mortgage?
The key differences are the absence of required monthly repayments, the minimum age requirement, and the way the loan is eventually repaid.
| Equity release (lifetime mortgage) | Standard mortgage | |
|---|---|---|
| Monthly repayments | None required (interest rolls up) | Required every month |
| Ownership | You retain full ownership | You retain full ownership |
| Minimum age | 55 | No minimum |
| Repayment trigger | Death or entry into long-term care | End of mortgage term |
| No negative equity guarantee | Yes (ERC member products) | Not applicable |
| Early repayment charges | Usually apply | Usually apply |
Use our equity release calculator to see how a lifetime mortgage balance grows over time.
What is equity release used for?
There are no restrictions on how equity release funds are used. In practice, homeowners use the released cash for a wide range of purposes:
- Supplementing retirement income — boosting monthly cash flow where pension income falls short
- Home improvements — adaptations, extensions, or repairs to stay comfortable in later life
- Clearing an existing mortgage — paying off a repayment mortgage that runs past retirement
- Helping family financially — gifting a deposit to children or grandchildren, often described as a living inheritance
- Paying off debts — clearing credit cards or personal loans to reduce monthly outgoings
- Care costs — funding home care without selling the property
Key features of equity release
No monthly repayments (typically)
Most lifetime mortgage customers make no monthly payments. Interest compounds and is added to the loan. Some products allow optional interest payments to slow the loan's growth.
Tax-free cash
Money received from equity release is not subject to income tax. It may affect entitlement to means-tested benefits — see our guide to equity release and means-tested benefits.
You stay in your home
With a lifetime mortgage, you retain full legal ownership. With a home reversion plan, you sell a share but retain the right to live there rent-free for life.
No negative equity guarantee
All products from Equity Release Council members include a no negative equity guarantee. You cannot end up owing more than your home is worth.
Regulated product
Equity release is regulated by the Financial Conduct Authority. Advisers recommending equity release must hold specific qualifications and follow FCA conduct rules. Advice is mandatory — you cannot take out a regulated equity release product without it.
What are the costs of equity release?
The main costs are arrangement fees, valuation fees, legal fees, and the interest that compounds over the life of the loan. The longer a lifetime mortgage runs, the more interest accumulates — this is the most significant long-term cost and the one most worth understanding before proceeding. Full detail is in our guide to equity release costs and fees.
Is equity release safe?
Modern equity release from Equity Release Council members comes with key consumer protections: the no negative equity guarantee, the right to remain in your home for life, the requirement for independent legal advice, and product portability. The product is FCA-regulated and advice is a mandatory requirement. The genuine risks — principally compound interest growth, reduced inheritance, and the potential impact on means-tested benefits — are real but manageable with clear information. Full analysis in our guide to is equity release safe?
Frequently asked questions
What is the difference between equity release and a lifetime mortgage?
A lifetime mortgage is the most common type of equity release. The terms are often used interchangeably, though equity release also covers home reversion plans. If someone says “equity release” without specifying, they almost certainly mean a lifetime mortgage.
Is equity release the same as a remortgage?
No. A remortgage replaces one mortgage with another and typically requires monthly repayments. Equity release (as a lifetime mortgage) usually has no monthly repayments and runs until death or entry into long-term care rather than a fixed term.
Can I still leave an inheritance if I take equity release?
Yes, though the loan plus interest will reduce the value of the estate available to beneficiaries. Some products include an inheritance protection option that ring-fences a portion of the property value. See our guide to equity release and inheritance.
Can I move house if I have equity release?
Most lifetime mortgages are portable, meaning the plan can be transferred to a new property subject to the lender’s criteria. See our guide to moving house with equity release.
What happens to equity release when I die?
The property is sold and the loan plus rolled-up interest is repaid from the proceeds. Any remaining value passes to the estate. See what happens to equity release when I die?
Related guides
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Reviewed by Chris, CII-qualified equity release specialist · Last reviewed July 2026