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What is equity release and how does it work?

Releasing equity from your home can help you to turn your property into valuable retirement income

What is equity release?

When it comes to your house, your equity is its market value, minus any debts you have secured against it.

Equity release is the process of turning that equity into cash that you can spend, without having to sell your home.

How does equity release work?

There are two ways to release equity from your home – taking out a loan against part of it, with a lifetime mortgage, or selling part of it, with a home reversion plan.

By far the most popular form of equity release, a lifetime mortgage is a loan that is repaid when you die or enter long term care. The lender receives their proceeds from the sale of your home upon your death or when you enter long term care

With a home reversion plan you sell a portion of your home. When you die or enter long term care your house will be sold and the home reversion provider will get their share of the proceeds

With either product you can receive the money in a lump sum or over several instalments.

To release equity from your home you need to have an equity release product recommended to you by a qualified adviser who has considered your unique circumstances. There are lots of things to consider, including inheritance and how equity release payments could affect your benefit entitlements or tax obligations.

Before identifying the right equity release product, the adviser will also help you to consider alternatives such as downsizing, remortgaging to a standard mortgage product or a retirement interest-only mortgage.

Equity release isn’t always the right solution, but it is working for lots of people.

Equity Release Explained

Equity Release Explained by OneFamily Advice
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Equity Release

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Maximum loan amount:

Important: The loan amounts above are an illustration of the amount you could borrow. The actual amount may vary depending on your individual circumstances. The figures are not guaranteed and do not constitute an offer to lend. The loan amount will need to pay off any existing mortgage secured against the same property.

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