Equity Release Mortgages
Equity Release Mortgages | If you're considering releasing tax-free cash from your home, start by reading our comprehensive equity release guide tailored for UK homeowners aged 55 and over. This guide covers key topics including Lifetime Mortgages, Home Reversion Plans, and the pros and cons of each solution, helping you make an informed choice. Understanding the impact on your home, inheritance, and future finances is crucial before committing to any later-life lending product. If you're unsure where to begin or want advice specific to your situation, speak to an equity release advisor today we're here to help, with no obligation.
What is Equity Release?
Equity release allows UK homeowners aged 55 or over to access tax-free cash tied up in their home – without needing to move. It’s typically arranged through a Lifetime Mortgage, where interest rolls up, and the loan is repaid later, or a Home Reversion Plan, where you sell part (or all) of your property in exchange for a lump sum or regular payments.
This flexible form of later-life lending can boost your retirement income, help fund home improvements, or support your loved ones financially. However, it reduces the value of your estate, which may affect the inheritance your family receives.
Because equity release is a long-term financial commitment, it’s essential to get guidance from a specialist.
How Does Equity Release Work
Lifetime Mortgage – The Most Popular Option
A Lifetime Mortgage lets you release tax-free cash from your home while retaining full ownership.
- Tax-Free Lump Sum or Drawdown: Borrow a one-time amount or flexible withdrawals secured against your property.
- No Monthly Repayments: In most cases, there are no monthly payments required.
- Compound Interest: Interest is added to the loan and compounds over time, increasing the total owed.
- Loan Repayment: The full amount (loan + interest) is repaid when the last homeowner dies or enters long-term care. This is usually done through the sale of the property.
Learn more about how later-life mortgages compare to equity release solutions.
Home Reversion Plan – Sell Part of Your Home
With a Home Reversion Plan, you sell part or all of your home to a provider in exchange for a tax-free lump sum or regular income, while continuing to live there rent-free for life.
- Sell a Share: You sell a portion (or 100%) of your home below market value.
- Remain in Your Home: You stay in the property for life, without paying rent.
- Repayment: When your home is sold (usually after death or when you move into care), the provider receives its agreed share of the proceeds.
Key Benefits of Equity Release
Access Tax-Free Funds, Lump Sum or Drawdown
With equity release, you can receive a one-time lump sum or a series of smaller drawdown payments, all completely tax-free. Funds can be used however you choose – from clearing debts, home renovations, or supporting family, to enhancing your retirement lifestyle.
Keep Ownership with Lifetime Mortgages
With a lifetime mortgage – the most popular form of equity release – you remain the legal owner of your home. There’s no need to downsize or relocate, allowing you to stay in your community and retain full occupancy rights.
No Compulsory Monthly Repayments
Most plans require no monthly repayments unless you choose to make them voluntarily. The loan, plus accrued interest, is repaid when the property is sold (typically upon death or entry into long-term care). This keeps cash flow flexible throughout retirement.
No Negative Equity Guarantee
All providers approved by the Equity Release Council include a no-negative-equity guarantee. This ensures your estate will never owe more than your property is worth, protecting your beneficiaries from debt.
Benefit from Property Value Growth
Since you retain ownership with a lifetime mortgage, you also retain any upside in your property’s future value, which could help offset the cost of borrowing over time.
Flexible Features & Inheritance Planning
Modern equity release plans allow for voluntary repayments, portability (moving the plan to another eligible property), and inheritance protection. This makes it easier to adapt the mortgage to your changing circumstances.
Important Considerations Before You Proceed
While equity release offers flexibility, it also comes with long-term commitments:
Reduced Inheritance: The loan and compounding interest reduce the equity available for your heirs.
Potential Impact on State Benefits: Receiving cash may affect eligibility for means-tested benefits, such as Pension Credit or Council Tax Support.
Interest & Upfront Costs: Rates are typically higher than standard mortgages, and there may be advice, legal, and valuation fees to factor in.
Mortgage Advice..
Thinking of getting a mortgage? Our experienced team of skilled mortgage advisers are here to offer the essential guidance you require. Relying on our comprehensive understanding of the mortgage market, we’ll ensure you secure the perfect mortgage to suit your specific situation.
Pros and Cons of Equity Release Products
As trusted equity release brokers in the UK, we guide homeowners aged 55+ through Lifetime Mortgages and Home Reversion Plans. Whether you’re supplementing your retirement, gifting to family, or clearing debt, our FCA-regulated advisors help you make informed, safe decisions.
Curious how much equity you could release? Use our free mortgage calculator to get a quick estimate tailored to your home’s value and age.
Benefits and Risks of Equity Release
Equity release isn’t right for everyone. Here’s a clear comparison to help you weigh the advantages and drawbacks:
| Pros of Equity Release | Cons of Equity Release |
|---|---|
| Access tax-free cash without selling your home | Reduces the value of your estate for inheritance |
| No monthly repayments (interest rolls up or repaid at sale) | Interest compounds over time, increasing total owed |
| Stay in your home for life with a Lifetime Mortgage | May affect eligibility for means-tested benefits |
| Flexible options: lump sum, drawdown, or regular income | Early repayment charges may apply |
| Regulated by the FCA and Equity Release Council | Setup fees and legal costs involved |
Why Choose Connect Mortgages?
- Over 20 years of mortgage expertise in the UK
- Access to leading equity release lenders and products
- Specialists in later life mortgages and lending
- Fully FCA-regulated, with personalised support and transparency
Still unsure if equity release is right for you? Speak to one of our equity release mortgage advisors today, no obligation, just honest advice.
FAQs: Equity Release
Most frequent questions and answers about equity release.
It can be a good idea in certain circumstances, but it is important to seek independent financial advice before proceeding with equity release plans. Equity release should only be entered into after fully understanding the risks and implications of equity release plans.
The amount of equity that can be released through equity release plans depends on your age, the value of your home and any outstanding mortgages or secured loans. Typically equity release customers can access up to 55% of their home’s value.
Yes, equity release plans are tax free. Equity release customers do not have to pay Income Tax or Capital Gains Tax on equity release payments.
Yes, equity release plans typically provide customers with the option to sell their home if they wish. Equity release providers will usually agree to release the remaining equity when a sale is completed.
No, equity release plans are typically only available to customers aged 55 and over. Equity release providers will not offer equity release plans to those under this age. It is important to seek independent financial advice if equity release is being considered.
Yes, equity release plans can be taken out if you have an outstanding mortgage. Equity release customers must ensure that any equity release payments are sufficient to cover the remaining balance of their mortgage.
Yes, you can take out on leasehold properties. Equity release customers must check the terms of their lease to ensure equity release is permitted.
When equity release customers pass away, equity release providers will repossess the home and use the proceeds of the sale to repay any outstanding equity release funds. Any remaining equity will be paid to the customer’s estate.
What next?
We will come back to you quickly to let you know how we can help. If you would like to speak to us immediately, call us on 01708 676 111.
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Liz Syms is the CEO and Founder of Connect Mortgages, a specialist in finance for property investment. With over 25 years of experience in mortgages and financial services, Liz has helped countless people get their dream homes and investment properties. She is passionate about giving her clients the best advice possible when it comes to financial decisions relating to mortgages and protection and is dedicated to providing the highest quality of service. With her wealth of knowledge in the industry, Liz is a respected leader in mortgages and financial services and has grown her team to over 300 advisers nationally. She strives to make Connect Mortgages one of the most successful companies in its field.
About the Author
Liz Syms is the CEO and Founder of Connect Mortgages, a specialist in finance for property investment. With over 25 years of experience in mortgages and financial services, Liz has helped countless people get their dream homes and investment properties. She is passionate about giving her clients the best advice possible when it comes to financial decisions relating to mortgages and protection and is dedicated to providing the highest quality of service. With her wealth of knowledge in the industry, Liz is a respected leader in mortgages and financial services and has grown her team to over 300 advisers nationally. She strives to make Connect Mortgages one of the most successful companies in its field.