Equity Release FAQ
General information only. This is not financial advice.
Last reviewed: 2026-06-06
What is equity release and how does it work?
Equity release is a regulated financial product that allows homeowners — typically aged 55 or over — to access some of the value tied up in their property without selling it or making monthly repayments. The two main types are lifetime mortgages, where you borrow against your home and the loan plus rolled-up interest is repaid when the property is sold, and home reversion plans, where you sell a percentage of your property in exchange for a lump sum or income. Both types are regulated by the FCA, and the Equity Release Council sets voluntary standards that most mainstream providers follow, including a no-negative-equity guarantee.
What is the difference between a lifetime mortgage and a home reversion plan?
A lifetime mortgage is a loan secured on your property — you retain full ownership, but interest accrues over time and is repaid alongside the capital when the property is eventually sold. A home reversion plan involves selling a percentage of your property to a reversion company at below market value in exchange for a cash lump sum or regular income; you continue to live there rent-free for life. Lifetime mortgages are by far the more common product; home reversion plans are less widely available and generally offer a lower proportion of market value in exchange for the share sold.
How does interest roll-up work on a lifetime mortgage?
With a standard roll-up lifetime mortgage, you do not make monthly interest payments. Instead, interest is added to the outstanding loan balance each month and compounds over time. Because of this compounding effect, the total amount owed can grow significantly — a loan left for 20 years could double or more, depending on the interest rate. Some lifetime mortgage products now allow voluntary partial interest payments, which can substantially reduce the final balance owed and preserve more of the estate.
Will equity release affect the inheritance I leave?
Equity release reduces the equity remaining in your property, which means there is less to pass on as inheritance. With a roll-up lifetime mortgage, the compounding of interest over many years means the outstanding loan can become a significant proportion of the property's value. However, most Equity Release Council-approved products include a no-negative-equity guarantee, ensuring that the debt can never exceed the property's sale value. Some products offer inheritance protection features that ring-fence a fixed percentage of the property's value for beneficiaries.
Who is eligible for equity release?
To qualify for a lifetime mortgage, you must typically be at least 55 years old, own a UK property that is your main residence, and have a property worth at least £70,000–£100,000 depending on the lender. Home reversion plans generally require applicants to be aged 65 or over. The property must be in reasonable condition and of standard construction; some lenders exclude leasehold flats with short leases, properties above commercial premises, or homes in poor repair. There is no minimum income requirement for most equity release products, as no monthly repayments are required.
What are the alternatives to equity release?
Before proceeding with equity release, it is worth considering alternatives that may better suit your circumstances. A Retirement Interest-Only (RIO) mortgage allows you to borrow against your home and pay monthly interest only — the capital is repaid on death or when you move into care, but the debt does not compound. Downsizing to a smaller property releases equity without any loan obligation. Mainstream later-life mortgages with specialist age-limit waivers are available from some building societies. State benefits, grants, and local authority assistance may also be available if income or care needs are the underlying issue. Independent financial advice is strongly recommended before committing to equity release.
Risk warning
Your home may be repossessed if you do not keep up repayments on your mortgage. Think carefully before securing other debts against your home. This article is general information only and does not constitute financial advice.
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