Equity Release

🕑 6 minute read

Equity release allows you to unlock some equity in your home without having to move. If you’re over 55, you might be able to access money that you’ve built up by paying off your existing mortgage.

What is equity release?

Mortgage equity is essentially the difference between what you owe on your mortgage and the current value of the property.

For example, if your home is worth £250,000, and you have £100,000 to pay on your mortgage, you have equity of £150,000.

Releasing equity allows you to access the money you have invested into your home. Rules for equity release will depend on your lender, but usually you’ll need to be over 55.

To qualify for equity release:

  • Age - There will be a minimum and maximum age that you will need to meet.
  • Property Value - Your home will need to meet a minimum value.
  • Applicants - Maximum number of applicants is usually two.
  • Ownership - You own your property and it is your main residence.
  • Location - Homes located in England, Scotland or Wales are most commonly accepted. A small number of lenders will lend in Northern Ireland and other isles.
  • Property Construction - Your home is of ‘standard construction’ i.e. bricks or stones, pitched tile roof. However other construction types can be acceptable by some lenders.
  • Property Condition - Your home must be in good condition and a valuation will need to take place to confirm this.


How does equity release work?

Equity release works by borrowing cash against the value of your home. There are two ways to do this – a lifetime mortgage and a home reversion plan.

Lifetime mortgage

Lifetime mortgages allow you to unlock some of the value from your home. The money can be spent on items such as funding a new car, taking a holiday, visiting relatives abroad, supporting grandchildren or loved ones.

With some lifetime mortgages you may be able to pay the monthly interest or you may choose to make no payments. The loan plus interest will be repaid when you, or the last borrower, passes away or moves out of the property permanently i.e. into long-term care.

Home reversion

With home reversion, you sell a share of your property in return for a lump sum. You will still live in your home and know what percentage of the home you have sold. Home reversion plans can have consequences in the future. When your property sells, any sales proceeds get shared, according to the split of the property.

If you’re under the age of 55, you will most likely not be able to access these types of equity release. You might be able to borrow more on your mortgage.

How much does equity release cost?

There can be various upfront fees associated with equity release, which you should check as these can differ between providers. These may include an arrangement fee, valuation fee, solicitor fee and an advice fee.

How long does equity release take?

The equity release process is not quick. You must receive advice to ensure that it meets your current and future needs and circumstances, as well as making sure you understand any risks of taking out equity release. It can take around eight weeks for the process to be completed, and for you to receive the funds. However, this could be shorter or longer depending on your circumstances.

As releasing equity is a significant decision, there are several steps, such as receiving advice and submitting your application, having a property valuation, an offer, legal advice, and the release.


Considerations before releasing equity

You'll owe more money

Consider how this might affect you long-term. If you haven’t paid off your mortgage and decide to increase the amount you owe, you may have to borrow on a higher interest rate on the increased amount which will cost you more over the life of the loan. If you are advised on an Equity Release mortgage, you don’t have to make payments. Then the amount you owe overall will increase as the interest will be added to the loan.

Less inheritance

While it’s important to prioritise your standard of living, it’s worth noting that releasing equity can sharply reduce the amount of inheritance you could otherwise pass on.

Lifetime mortgages aren’t repaid until the last remaining borrower dies or moves out of the property permanently, meaning that the interest can add up quickly and will get deducted at the point the property sells.

Consider downsizing instead

Downsizing is an option that could free up the money you need so should always be considered as an alternative option if you’d be happy to move home.

If you’ve paid your mortgage off, selling your home and buying a smaller, cheaper property outright could mean you free up money from the sale. However, it’s not without its cost, as moving house means moving fees and conveyancing fees.

Use savings or credit

If what you need the money for is not urgent, savings are the safest, cost-free option to pursuing what you want.

If you want to borrow smaller amounts, there are lots of borrowing options that might be available to you.

Calculators and tools

We have a range of mortgage calculators to help you:

  • Find out how much you could borrow from Halifax
  • See how much you could save if you make overpayments on your mortgage
  • Get an idea how a change to the Bank of England Base Rate could affect your monthly payments
Use our calculators and tools

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