What is Equity Release?

Retirement Planning

Equity Release is the collective name given to a range of products that allow home owners to withdraw capital from their residence.

Equity Release is only available to those who are aged 55 or above and enables an individual to take a cash lump sum, a series of payments, or a combination of both.

Equity Release should not be entered into lightly and full financial advice should be taken before any decision is made. For those that are considering releasing cash from their home, there are 2 types of Equity Release:

Lifetime Mortgage


With a Lifetime Mortgage, an individual opts to take out a mortgage on their main residence whilst still retaining ownership. It works like any other mortgage as in repayments have to be made to the mortgage lender for the cash that has been released however, there is the choice to make repayments or let the interest roll-up. The loan amount plus any accrued interest will have to be repaid on death of the individual however an individual can choose to ring-fence some of the property’s value in order to provide an inheritance for family members. The full loan amount will have to be met however.


Home Reversion


With a Home Reversion plan, an individual sells part, or all, of their home in return for a cash lump sum or regular payments. The individual has the right to remain in the property up until their death without the need for paying a rent. Part of the agreement is however that the individual must keep the property is a good state of repair and insured at all times.

Again a percentage of the property can be ring-fenced to be left to family members for inheritance purposes. This percentage will always remain the same irrespective of property price movements, unless the individual decides to take further cash advances further down the line.

After death, the property is sold and the property value is shared in proportion to the agreement of ownership.


There are a lot more rules and regulations to Equity Release and as we have previously mentioned it is something that shouldn’t be entered into without a lot of thought and consideration as well as ensuring Financial Advice is taken.

If you’re looking for Financial Advice, please don’t hesitate to get in touch. We can assist with mortgages, protection, Will writing, investments, savings, pensions and more. You can call us on 0800 044 5733 or complete the form below and we will get back to you as soon as we can.

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