Equity release in the UK lets homeowners aged 55 or over take money from the value of their home without moving out, through a loan or a part-sale.

The money is normally repaid, with the interest that has built up, from the sale of the home when the last borrower dies or moves into long-term care. This guide explains what equity release is, how a lifetime mortgage works from the first conversation to the day the plan ends, the safeguards around it and the costs that come with it. It does not tell you whether to do it.

Two kinds of professional help are part of taking out equity release: advice from a qualified equity release adviser, and independent legal advice from your own solicitor. To talk your own situation through with a qualified equity release adviser, complete the form on this page; we pass your enquiry to one. It costs nothing to ask, and asking commits you to nothing.

What equity release means

Your equity is the share of your home that is yours outright. MoneyHelper, the government-backed guidance service, puts it simply: "Equity is the part of a property you own. So, if you have a mortgage, the equity is the difference between your home’s current value and what’s left to pay on the mortgage." Equity release turns some of that value into money you can spend while you carry on living in the house.

There are two ways of doing it. The Equity Release Council, the industry's trade body, lists those two types and says the Financial Conduct Authority regulates both.

  • A lifetime mortgage is a loan secured on your home. You keep owning the property, and the loan is repaid when the plan ends. Most of this guide is about this type.
  • A home reversion plan is a sale: a provider buys all or part of your home, and you keep the right to live there. There is more on this below.

‘Equity release’ is the umbrella term. When a firm writes about a specific product, the FCA's rules for mortgage communications (MCOB 3A.2.6R in the FCA Handbook) say it must call a lifetime mortgage a ‘lifetime mortgage’ and a home reversion plan a ‘home reversion plan’, and not use any other expression for them. So if you have wondered whether a lifetime mortgage is the same as equity release: it is one of the two kinds of equity release, not a separate product.

Equity release is not a retirement interest-only mortgage, where you pay the interest monthly. MoneyHelper lists it as an option to consider for someone who can afford to make monthly repayments; our comparison of a retirement interest-only mortgage and equity release sets out how they differ. Nor is it the same as remortgaging: see equity release compared with a remortgage.

How a lifetime mortgage works, from start to finish

The Equity Release Council's own summary is the clearest short version:

A Lifetime mortgage involves taking a type of mortgage which does not require monthly repayments, although with some plans rather than roll up the interest you can opt to make monthly repayments if you wish. You retain ownership of your home and interest on the loan is rolled up (compounded). The loan and the rolled up interest is repaid by your estate when you either die or move into long term care.

— Equity Release Council, What is equity release?

Taken stage by stage, that means:

1. You take the money in one go or in stages

MoneyHelper lists the ways the money can come to you: a lump sum, with most lenders setting a minimum of £10,000, or "smaller amounts taken when you need it or as a regular income – called a ‘drawdown’". With a drawdown plan you take an initial amount and keep the rest as a reserve to draw on later. Our guide to drawdown lifetime mortgages explains how the reserve works.

To give a sense of scale, the Equity Release Council's market report for April to June 2026 (Q2 2026) gives an average new lump sum of £113,779, an average initial drawdown of £63,642 and an average drawdown reserve of £56,893. These are averages across all the plans taken out in that quarter, not what any one household can borrow. How much is available on a given home depends largely on age and the property's value; how much equity release you can get covers that.

2. Interest is added to the loan and compounds

On a standard roll-up lifetime mortgage you make no monthly payments. Instead, interest is added to the loan, and the next period's interest is charged on the larger balance: interest on interest. The debt therefore grows. The consequence is that the earlier a plan is taken out, the longer the loan runs and the more interest builds up. How compound interest works on a lifetime mortgage walks through the mechanics, and equity release interest rates covers how rates are set.

Under the Equity Release Council's product standards, the interest rate on a member's lifetime mortgage is either fixed or, if variable, has a fixed cap, and stays that way for the life of the loan.

3. You can usually choose to pay some of it off

MoneyHelper says payment options are usually flexible, up to and including paying nothing, and that you can choose whether to make repayments to reduce your final debt. Some plans let you pay the interest each month so the debt does not grow; interest-only lifetime mortgages are covered separately. The Council's standards say customers "must have the ability to make repayments without incurring any charges, subject to lending criteria of the provider", so the limits on how much you can repay without a charge are set in each plan's terms. Repaying more than that, or clearing the whole loan early, can bring an early repayment charge; see repaying equity release early.

4. You stay in your home

The Council's home-for-life standard says customers "must have the right to live in their property for the remainder of their life, or until they permanently move into care", provided the property stays their main residence and the plan's terms are kept. If you later want to move, its standards also give the option to move to a suitable alternative property and transfer the lifetime mortgage, provided the lender's criteria are met at the time of the move and the contract's terms are kept; moving house with equity release has the detail.

The plan does carry conditions. MoneyHelper notes that restrictions may apply, such as on using your home as a holiday let, leaving it empty for long periods or making large structural changes.

5. The plan ends on death or a move into long-term care

For a couple, the plan runs until the second person has gone: in the Council's words, "the repayment is not made until the last remaining person living in the home either dies or moves into care". The home is then usually sold and the loan, with the rolled-up interest, is repaid from the proceeds; whatever is left goes to the estate. How long the estate has to sell is set out in the plan's terms. If the last borrower moves permanently into care, the Council's standards say any early repayment charge is waived "upon receipt of a medical practitioner’s certificate", provided the plan's terms have been met.

Finally, the no-negative-equity guarantee caps what can be owed. Every product meeting the Council's standards must have one, so that, provided the home "is sold for the best price reasonably obtainable and the terms and conditions of the loan have been met, the borrower or estate will never owe more than the property is worth, after deduction of reasonable sales costs."

Home reversion plans: the other type

A home reversion plan works differently. Rather than borrowing, you sell all or part of your home. The Equity Release Council describes it this way: the provider buys all or part of your house, taking into account your age and your health, and gives you a tax-free cash lump sum (or regular payments) and a lifetime lease that guarantees you the right to stay in the property rent-free for the rest of your life.

Because it is a sale, there is no loan and no interest. The trade-off is the price: MoneyHelper says you sell "usually below market value". When the plan ends, the provider's share of the home goes to the provider, and your estate keeps the share you did not sell, including any rise in its value. What a home reversion plan is and home reversion compared with a lifetime mortgage go into the detail.

Who can take out equity release

The starting point is age and ownership. MoneyHelper says: "If you’re a homeowner aged 55 and over, equity release may allow you to borrow this money from your home without selling." Individual lenders set their own age limits within that; equity release age limits covers who can borrow at what age.

Beyond that, lenders look mainly at the property rather than your income. MoneyHelper notes that, unlike a standard mortgage, equity release has no affordability assessment, and that the upper age limit at application is usually less restrictive. Each lender sets its own criteria for the home itself, such as its value, its construction, a lease's length or whether it is listed, and the home is valued as part of the process. If you still have a mortgage, the offer can carry "special conditions such as clearing any outstanding mortgages"; see equity release with an existing mortgage.

Pages on specific situations: flats, leasehold homes, non-standard construction, listed buildings, former council houses, shared ownership, joint ownership and a poor credit history.

In Scotland the security works under Scottish property law. A loan secured on land there takes the form of a standard security: section 9 of the Conveyancing and Feudal Reform (Scotland) Act 1970 says a right over land "for the purpose of securing any debt by way of a heritable security shall only be capable of being effected at law if it is embodied in a standard security." So on a Scottish home a lifetime mortgage is secured by a standard security rather than a mortgage charge, and the legal work follows Scottish conveyancing.

The steps, from first conversation to completion

MoneyHelper sets out the process, and the Equity Release Council's standards add what members commit to at each stage. In outline:

  1. Talk to a qualified equity release adviser. The FCA's rules expect advice: the purpose of its equity release chapter, MCOB 8.2.2G, includes that "customers for equity release transactions receive advice in all cases", with only limited execution-only exceptions. MoneyHelper suggests asking at the start what fees you will pay, whether the adviser searches the whole market, and what types of product the adviser can offer, and advises always checking that the adviser is registered with the FCA.
  2. Receive a recommendation and an illustration. The adviser gives you "a ‘suitability letter’ or ‘product confirmation letter’" and "a Key Facts Illustration (KFI)". The KFI covers the overall cost of the scheme, any fees to pay and, for a lifetime mortgage, the interest rate deal, and you can use it to compare similar schemes from other providers.
  3. The application and valuation. Once you agree a plan with your adviser, the application goes to the provider, which values the property.
  4. Get the offer. If the application is accepted, "you’ll receive an offer document." MoneyHelper is clear on this point: "If you’re not happy or unsure, you don’t have to go ahead."
  5. Take independent legal advice. The Equity Release Council's standards say: "All customers who take out equity release need to receive independent legal advice." Your solicitor goes through the plan with you, and you then sign a certificate confirming your rights and obligations have been explained and that you wish to go ahead. The solicitor's role in equity release explains this stage.
  6. Completion. The money is released to you, or first used to clear any existing mortgage if the offer requires it.

How long all this takes varies with the property, the solicitors and the lender; how long equity release takes covers the typical stages, and the conveyancing process covers the legal paperwork.

The Council's standards also list what a member adviser's explanation should cover, including "all the costs that you will have to bear in setting up the plan; the tax implications; what will happen if you wish to move to another property; and how changes in house values may affect your plan."

The safeguards: FCA rules and Equity Release Council standards

Two layers of protection apply, and they are different in kind. Lifetime mortgages and home reversion plans are regulated by the Financial Conduct Authority, so the firms that advise on and provide them must be authorised and follow its rules, including the advice expectation above. See how equity release is regulated.

The Equity Release Council is something else: "a voluntary trade body". Its standards, which the Council says go "over and above regulation", are commitments its members make; they are not law that binds every firm. The product protections quoted in this guide (a fixed or capped rate, the right to stay, the option to move, penalty-free repayments within the plan's terms and the no-negative-equity guarantee) are standards for Council members' products. The Council adds that "Only products which meet our Standards provide the protections outlined", and that an adviser who suggests a product outside them must "clearly explain to you why and what the risks are." The Equity Release Council's standards sets them out in full.

The trade-offs to weigh

Equity release can give a homeowner money without moving or making monthly payments. MoneyHelper also calls it "a lifetime commitment", with these costs:

  • The debt grows. On a roll-up lifetime mortgage, interest compounds on the whole balance. The interest rate on a lifetime mortgage may be higher than on an ordinary mortgage, so the debt can increase quickly.
  • Your estate is smaller. Whoever you leave the property to in your will receives only what is left after the loan is repaid, or the portion you did not sell. How equity release affects inheritance looks at this.
  • Means-tested benefits can be affected. State benefits that are means-tested, Local Authority Grants and Council Tax reductions could all be affected by a plan. Released money you hold as savings counts as capital: GOV.UK's Pension Credit rules say savings of £10,000 or less do not affect Pension Credit, but above that "every £500 over £10,000 counts as £1 income a week." Equity release and benefits has more.
  • Early repayment charges. Repaying the plan early, beyond any penalty-free allowance in its terms, can bring an early repayment charge, and MoneyHelper says agreements "can be difficult to alter".
  • Setting-up costs. MoneyHelper says the fees for advice, solicitors, valuation and arrangement could add up to between £1,500 and £3,000. See equity release fees.
  • Fewer options later. "You may need the equity in your property to fund long-term care for you or your partner. Releasing money early limits your options."

Whether those trade-offs are worth it depends on what the money is for, your health, your family's plans and what else you could do, from using savings to downsizing; alternatives to equity release and whether equity release is a good idea weigh them up. Because the answer turns on your age, home, benefits and estate, a qualified equity release adviser can look at them together in one conversation. The form on this page puts that conversation in motion.

Questions people ask about equity release

Is equity release a debt?

A lifetime mortgage is: it is a loan secured on your home, repaid with interest when the plan ends. A home reversion plan is a sale of part or all of the home rather than a loan. Is equity release a loan? compares it with an ordinary mortgage.

What happens if I go into a care home?

A permanent move into long-term care normally ends the plan, unless a joint borrower still lives in the home. Under the Equity Release Council's standards, any early repayment charge is then waived once the lender has a medical practitioner's certificate. Using equity release to pay for care covers the wider question.

Can I change my mind?

Before you sign, yes: MoneyHelper says that if you are not happy or unsure at the offer stage, "you don’t have to go ahead." For after completion, ask the adviser and solicitor what the plan's own terms allow.

Is the money taxed?

MoneyHelper lists receiving a tax-free lump sum or regular income among the benefits. Holding it as savings can still affect means-tested benefits, as above; see whether equity release is taxable.

Can I use equity release to pay off debts?

Some people do, but MoneyHelper points out that "the equity loan will also need to be repaid", and, if the debt is a problem, says to speak to a trained adviser, pointing to free and confidential debt advice.

Next step

Equity release is a decision for the rest of your life, and often your family's too. If you would like a qualified equity release adviser to go through how it would work on your own home, alongside the alternatives, the form on this page is the place to start. Your solicitor's independent advice comes later, before the plan completes.

Sources: MoneyHelper, What is equity release?; Equity Release Council, Professional Standards & Guarantees; Equity Release Council, Q2 2026 market report; FCA Handbook, MCOB 3A.2 and MCOB 8.2; GOV.UK, Pension Credit eligibility; legislation.gov.uk, Conveyancing and Feudal Reform (Scotland) Act 1970, section 9.