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Equity release mortgage
When it comes to equity release, making the right decision matters. That’s why we work with Royal London Equity Release Advisers who provide expert, whole-of-market advice. helping you understand your options, compare plans from lenders across the market, and decide whether equity release is right for you.
Royal London Equity Release Advisers are members of the Equity Release Council the UK industry body, so you can be confident you’re getting advice that meets the highest standards. They’ll explain the benefits, risks, and costs in clear terms, so you can make an informed choice without pressure.
You’re under no obligation to proceed, and there are no upfront fees for advice. If equity release isn’t suitable, they’ll help you explore alternative options.
A lifetime mortgage is a loan secured against your home. It will reduce the value of your estate and could affect your entitlement to means-tested benefits.
What is equity release?
Equity release lets you access money tied up in your property to help you:
Repay your mortgage
Make home improvements
Support family members
Help fund retirement
Unlike downsizing, you remain in your home.
How does equity release work?
Lifetime mortgages
The most popular form of equity release, you borrow against your home with the option to make flexible monthly repayments or allow the interest to be added to the loan and roll up, which increases the overall cost of borrowing. The amount will then become due for repayment when the last homeowner enters long-term care or dies.
You have options to take a one-off lump sum or smaller amounts over time, known as a drawdown. You may also move home later, subject to the lender’s criteria.
Home reversion plan
You sell part (or all) of your home to a provider and receive a cash payment, typically lower than lower than the market value of your home. You must be at least 65 years old and, while you’ll live rent-free, you give up ownership of the portion sold and cannot move home. Due to this type of product offering less flexible options, Home Reversion plans account for less than 1% of the current equity release market.
What are the risks and safeguards?
Lifetime mortgage products from providers who are members of the Equity Release Council come with safeguards:
You’ll never owe more than your home is worth
You can stay in your home for life
Interest rates are fixed or capped
Voluntary repayments are allowed
What costs are involved?
Lifetime mortgages
With a lifetime mortgage, the main cost is the interest charged on the amount you borrow. This interest can either be paid monthly or added to the loan and rolled up, which means it compounds over time and increases the overall amount owed.
In addition to interest, there are other costs to consider:
Arrangement fees – Some lenders charge a set fee or a percentage of the amount borrowed for setting up the mortgage.
Legal fees – You’ll need a solicitor to act on your behalf, and these typically range from £500 to £1,000.
Valuation fees – Many providers include a free property valuation, but some may charge for this service.
Your adviser will provide a full breakdown of all costs before you proceed, so you know exactly what to expect.
Home reversion plans
Home Reversion Plans do not charge interest because you are selling part or all of your property rather than borrowing against it. However, there are still costs to consider. Most providers apply an arrangement fee for setting up the plan, and you will need to pay legal fees for your solicitor to act on your behalf.
The biggest financial impact is that you will receive less than the full market value for the share of your home you sell. This means the overall cost is reflected in the reduced amount you receive compared to selling your home outright.
Are you eligible?
To qualify for a lifetime mortgage, you generally need to:
Be aged 55 or over
Own a UK property worth at least £70,000
Use it as your main residence
Be looking to release a minimum of £10,000–£15,000
Allocate released funds to repay any existing mortgage
Before you decide
Consider alternatives such as downsizing, remortgaging, a retirement interest-only mortgage, renting out a room, or using existing savings or investments.
The most important consideration of equity release is that you as a customer have a full enough understanding of the products available to make a confident and informed choice. Always seek expert advice.”Laura Hamilton, Mortgage Expert
Equity release FAQs
What is the Equity Release Council?
The Equity Release Council (ERC) is the voluntary trade body that oversees the equity release sector and is regulated by the Financial Conduct Authority (FCA). It ensures that its members uphold certain values and standards of conduct through several product safeguards aimed at protecting customers.
What happens if I owe more than my house is worth when I die?
The ‘no negative equity guarantee’ means that you will never have to repay more than the value of your home. This means that your beneficiaries will not need to repay anything from your estate or their own pockets if the sale of your home does not cover your entire debt.
Essentially if you do owe more than the value of your home then the lender takes a loss - which is their risk to consider.
What should I worry about when releasing equity?
The best way to limit any worries that you may have about taking out equity release is to choose a ERC (Equity Release Council) certified expert adviser and ensure you thoroughly understand all of the risks involved with equity release. The main things to consider will vary slightly depending on which type you opt for, but in both cases you will need to consider:
Impact on inheritance
If you’re hoping to leave an inheritance behind for loved ones, it’s important to understand the impact equity release will have on this. Some plans allow you to 'ring fence' some of your home’s value for inheritance purposes. This is known as the ‘inheritance protection guarantee’ and might be a valuable option if leaving an inheritance is important to you.
Whether any means tested benefits you have would be affected
If you receive means-tested benefits from the government, taking a large lump sum payment of any kind can affect your eligibility to them, as you may end up above the savings threshold. Therefore taking a large lump sum during equity release won't be beneficial to everyone.
It may be possible to prevent this by taking a smaller upfront lump sum and split the remaining loan into regular payments. Speak to an equity release expert about your benefits if you are concerned about this.
Whether you intend to stay in your home forever
Especially with home reversion as you won't be able to do so unless you buy the property back from the lender at a much higher cost than they paid you for it. With a lifetime mortgage you should be able to move, so long as your new property meets the lender's criteria - however if you're moving to downsize, keep in mind that it may not.
Last updated: 23 January 2026