Equity Release Mortgages

Equity release allows homeowners aged 55 and over to access the wealth tied up in their property without selling or moving. Whether you want to supplement your retirement income, fund home improvements, help family members financially or repay an existing mortgage, equity release can unlock a tax-free lump sum or regular drawdown from your home. Mortgage One provides specialist equity release advice, assessing your circumstances and researching the market to find a plan suited to your needs.

Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.

To discuss whether equity release could work for you, call01202 155992orcontact Mortgage One.

What Is Equity Release and Who Is It For?

Equity release is a way of borrowing against the value of your home while you continue to live in it. The loan, plus any accumulated interest, is typically repaid when the property is sold after you pass away or move permanently into long-term care. There are no mandatory monthly repayments on most plans, although many modern products allow voluntary payments to manage the balance.

Equity release is generally available to homeowners aged 55 or over with a property in the UK worth at least around £70,000, though minimum values vary by lender. You do not need to have paid off your mortgage entirely. Any outstanding mortgage balance can be cleared using the funds released, provided sufficient equity is available.

Common reasons for releasing equity include supplementing pension income, funding later-life care, clearing debts, gifting to children or grandchildren, and making home adaptations. According to the Equity Release Council, total annual equity release lending in the UK reached £2.57 billion in 2025, an increase of 11 per cent on the previous year, reflecting growing demand as homeowners look for ways to support their finances in retirement.

Types of Equity Release

Equity release, lifetime mortgages and home reversion will reduce the value of your estate and can affect your eligibility for means-tested benefits.

There are two main types of equity release. Lifetime mortgages account for more than 99 per cent of the market. With a lifetime mortgage, you borrow a portion of your property’s value at a fixed or capped interest rate. You can take the funds as a single lump sum or through a drawdown facility that lets you access money in stages as needed. Interest rolls up over time unless you choose to make voluntary repayments. For a detailed explanation of how lifetime mortgages work, see the Mortgage One guide to lifetime mortgages explained.

Home reversion plans are far less common. Under a home reversion plan, you sell a share of your property to a provider in exchange for a tax-free lump sum or regular payments. You retain the right to live in the property rent-free for life, but the provider receives their agreed share of the sale proceeds when the property is eventually sold. You must typically be aged 60 to 65 or over to qualify for a home reversion plan.

How Lenders Assess an Equity Release Application

Equity release lending criteria differ from standard residential mortgages. Lenders focus primarily on three factors.

•       Age. The older you are, the higher the percentage of your property’s value you may be able to release, typically ranging from around 20 per cent to 60 per cent. This is because the lender expects a shorter loan term.

•       Property value and type. The property must meet the lender’s minimum value threshold and be of standard construction. Properties with non-standard construction or short leases may face restrictions.

•       Health and lifestyle. Some lenders offer enhanced terms for applicants with certain health conditions or lifestyle factors, allowing a higher release or a lower interest rate through what is known as an enhanced or impaired-life plan.

Unlike conventional mortgages, income and affordability are not typically assessed because no monthly repayments are required. However, your adviser will still review your wider financial position to ensure equity release is suitable for your circumstances. Mortgage One considers your full financial picture, including pension income, savings and any existing debts, before recommending a plan. Understanding how mortgage lending criteria work across different product types can help you see how equity release compares to mainstream lending.

For a free initial consultation on equity release, call01202 155992orcontact Mortgage One.

The Equity Release Process

Releasing equity involves several regulated steps designed to protect you throughout.

•       Your adviser carries out a detailed assessment of your needs, circumstances and objectives. This includes discussing alternatives to equity release, such as remortgaging to release equity, downsizing or a retirement interest-only mortgage.

•       If equity release is appropriate, your adviser researches the market to identify a suitable plan and provider. Mortgage One has access to plans from the whole of market.

•       You receive a personalised illustration showing the amount you could release, the interest rate, projected loan growth over time and the impact on your estate.

•       An independent solicitor provides separate legal advice to ensure you fully understand the terms, risks and implications before you commit. This is a mandatory requirement for all equity release plans.

•       A property valuation is arranged by the lender. Once the offer is issued and legal work is complete, funds are released, typically within six to eight weeks from application.

Protecting Yourself With Equity Release Council Standards

The Equity Release Council sets standards that go above statutory regulation. Plans from Council members currently include six product safeguards.

•       No negative equity guarantee. You will never owe more than the value of your property when it is sold, provided the sale achieves a reasonable market price and loan terms have been met.

•       Fixed or capped interest rates for the life of the plan, protecting you from future rate increases.

•       Right to remain in your home for life or until you move permanently into long-term care.

•       Right to move to another suitable property, subject to the new property meeting the lender’s criteria.

•       Right to make voluntary repayments without incurring charges, once any mandatory payment period has ended.

•       No early repayment charge if you move into care, whether in a formal care setting or with relatives providing care, subject to a medical certificate.

The Council introduced Standards 2.0 in May 2025, adding the sixth safeguard covering care-related moves and launching a Consumer Charter that sets out what customers can expect from member firms.

Independent legal advice is mandatory for all equity release plans, adding a further layer of consumer protection. If you are exploring ways to supplement your retirement finances, the Mortgage One guide to mortgages for pensioners covers additional later-life lending options alongside equity release.

Alternatives to Equity Release

Equity release is not the only way to access funds in later life, and a responsible adviser will always consider alternatives before recommending it.

•       Retirement interest-only mortgage. A RIO mortgage lets you borrow against your home while making monthly interest payments, keeping the loan balance stable. The capital is repaid when the property is sold. This can be more cost-effective over the long term than a lifetime mortgage where interest rolls up.

•       Remortgaging. If you have sufficient income, a standard remortgage may offer lower rates than equity release. Mortgage One can assess whether remortgaging is feasible based on your income and age. Read the Mortgage One remortgaging guide for more detail.

•       Second charge mortgage. A secured loan behind your existing mortgage may suit if you want to borrow a smaller amount without disturbing your current deal. See the Mortgage One second charge mortgage guide for how these work. Second Charge mortgages are by referral only.

•       Downsizing. Moving to a smaller or less expensive property can release capital while reducing ongoing household costs. However, downsizing involves its own costs and may not suit everyone.

Your adviser will explain the advantages and limitations of each option relative to your circumstances. In some cases, a combination of approaches may be appropriate.

To find out which option suits your situation, call 01202 155992orcontact Mortgage One for a free initial consultation.

The information provided in this article is for general guidance only and does not constitute personal or regulated financial advice. If you’d like to understand what these moves could mean for you, speak to Mortgage One. We can explain your options and timings based on your specific circumstances.

Some Buy to Let mortgages are not regulated by the Financial Conduct Authority.

FAQs

1. How much equity can I release from my home?

The amount depends on your age, the value of your property and your health. Most lenders allow you to release between roughly 20 per cent and 60 per cent of your home’s value. Older applicants and those with qualifying health conditions can typically access a higher percentage.

2. Will I still own my home if I take out equity release?

With a lifetime mortgage, yes. You retain full legal ownership of your property throughout the plan. With a home reversion plan, you sell a share of the property to the provider but keep the right to live there for life.

3. Can I move house after taking out equity release?

Yes. Plans from Equity Release Council members include the right to port your plan to a new property, provided the new home meets the lender’s criteria at the time of the move.

4. How will equity release affect my inheritance?

Equity release reduces the value of your estate because the loan and accumulated interest are repaid from the sale proceeds. Some plans offer an inheritance protection feature that lets you ring-fence a percentage of your property’s value for your beneficiaries.

5. Will equity release affect my entitlement to benefits?

It can. Receiving a lump sum or additional income from equity release may affect means-tested benefits such as Pension Credit, Council Tax Reduction and Universal Credit. Your adviser will discuss this as part of the suitability assessment.

6. What interest rates are available on equity release plans?

Equity release interest rates vary by lender, product type, your age and property value. Rates are fixed or capped for the life of the plan. Your adviser will compare available rates from across the market to identify a competitive option for your circumstances. Check the Mortgage One interest rate forecast for the latest on how the Bank of England base rate is influencing borrowing costs.

7. Is equity release safe?

Plans from providers who are members of the Equity Release Council include six product safeguards, including the no negative equity guarantee. Independent legal advice is mandatory before completion, and the Financial Conduct Authority regulates the advice process.

8. Can I repay my equity release plan early?

Most plans allow voluntary repayments. However, if you want to repay the entire loan early, early repayment charges may apply depending on the product and how long the plan has been in place. Your adviser will explain any charges before you commit.