Equity release, explained in plain English

What it is

Equity release is a way for homeowners aged 55 and over to take a tax-free lump sum, or a series of smaller sums, out of the value of their home while carrying on living in it. The money is repaid, with interest, when the last homeowner dies or moves permanently into long-term care, usually from the sale of the home.

There are two kinds. A lifetime mortgage is a loan secured on your home; you keep full ownership and the interest rolls up unless you choose to pay it. Over 99% of plans sold are lifetime mortgages. A home reversion plan is a sale of part or all of your home to a provider, at well below market value, in exchange for a lump sum and the right to live there rent-free for life. They are rare now.

Who it is for

• You are 55 or over (both of you, if the home is jointly owned; home reversion usually needs 60 or 65).
• Your home is in the UK, worth at least £70,000 or so, and is your main residence.
• You want money without monthly payments, or cannot pass the affordability checks an ordinary lender would run.
• You have looked at the alternatives and they do not fit better.

The five protections

Plans that meet Equity Release Council standards, which is nearly all of them, promise five things:

1. No negative equity guarantee. You, or your estate, can never owe more than the home sells for, however long you live and whatever happens to house prices.
2. The right to stay in your home for life, or until you move into long-term care.
3. A fixed interest rate for life, or a capped one if it is variable.
4. The right to move to another suitable property and take the plan with you.
5. The right to make penalty-free partial repayments, within the lender's limits (commonly up to 10% of the original loan a year).

What it is not

It is not free money and it is not a last resort. The interest is real: at 6%, a debt left to roll up roughly doubles every twelve years. It is also not "the bank owning your home". With a lifetime mortgage the home stays in your name, and the lender's claim is only on the sale proceeds at the end.

How you get it

You cannot buy equity release directly. The FCA requires advice from an adviser holding a specialist equity release qualification, and you must have your own solicitor. That is a good thing: the adviser looks at whether it is right at all, then at every lender, and the solicitor makes sure you understand what you are signing. The whole thing takes four to eight weeks.

The Is Equity Release Right for Me? PDF is a one-page self-check to do before you talk to anyone.

A note on the numbers. Rates, loan-to-value limits, fees and timescales are typical figures at the time of writing (2026) and vary between lenders and with your age, health and property. This is information, not advice. Equity release must be arranged through an FCA-authorised adviser, who will give you a personalised illustration before you commit to anything.