What is equity release?

Overview

Equity release is a way for homeowners aged 55 or over to access money from their property without having to move out. It allows you to unlock some of the value tied up in your home while continuing to live there.

For many people, most of their wealth is in their property. Equity release can turn part of that value into a tax free lump sum, smaller regular payments, or a mix of both. The money can be used for anything, such as improving your home, clearing debts, boosting retirement income, or helping family members.

There are two main types of equity release. The most common is a lifetime mortgage. This is a loan secured against your home. You still own your property, and the loan plus interest is usually repaid when the last homeowner passes away or moves into long term care.

The second type is home reversion. This involves selling a share of your home to a provider in return for a lump sum or regular payments. You continue to live in the property rent free for the rest of your life.

Equity release is not right for everyone. It can reduce the value of your estate and may affect means tested benefits. That is why it is important to receive advice and fully understand the long term impact.

When set up correctly and for the right reasons, equity release can provide financial freedom and peace of mind in later life. The key is making sure it suits your personal circumstances and future plans.