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Is equity release right for you?

Equity release can seem appealing, but is it the right way to get some extra cash? We weigh up the pros and cons.

In this article
Should I take out equity release? Equity release: how your debt grows Equity release pros and cons
What are the alternatives to equity release? Using equity release to pay for care in later life Where can I get equity release advice?

Should I take out equity release?

Equity release schemes are designed to be a lifelong commitment, so, if you change your mind, need to move house or want your equity for something else later, you could find yourself seriously restricted.

If you do take one out, you should consider checking to see if you can get a better deal once the early-repayment charge period has ended. This is particularly true at a time of historically low interest rates.

The Which? Money Helpline has a team of qualified experts that can help answer your questions on equity release. Try Which? and speak to one of our experts.

Equity release: how your debt grows

Based on a £250,000 property, the graph below illustrates the way your equity release debt could grow over time, reducing the equity you're left with.

It shows how a debt of £75,000 increases over time, compared with releasing the same amount using a home reversion scheme. The lifetime mortgage debt accrues at a fixed annual interest rate of 5.5%. 

Through the reversion scheme in this example, releasing the £75,000 means relinquishing 70% of the property's value. The property's value increases by 1% each year.

Equity release pros and cons

It can sometimes be a good idea if:

  • You don’t have other savings or income to live on in retirement
  • You don’t want to or can’t downsize
  • You don’t mind reducing the family’s inheritance
  • An IFA has told you this is the best option

However, if you do opt for it:

  • Your debt will grow due to compound interest unless you make repayments
  • Your benefits might be affected
  • You might be subjected to early repayment charges
  • You can't leave the full value of your home as an inheritance
  • You won't be able to take out another loan against your house

What are the alternatives to equity release?

There are several alternatives to equity release that may be more suitable, depending on your circumstances:

Unsecured loans

If the sum you want to borrow is small and you can meet repayments out of retirement income, it might be cheaper to take out an unsecured personal loan.

Mortgage extensions

If you haven't paid off an existing mortgage by the time you retire, it may be possible for your current lender to extend the term for another five or 10 years.

Not all lenders will deal with those aged over 65, however.

Retirement mortgages

Increasing numbers of lenders are offering retirement interest-only mortgages, where you can pay the interest but not the capital each month.

Some lenders don't have a maximum age at which you can apply, making them an interesting alternative to equity release.


If you need to release a substantial sum, selling your house and moving somewhere smaller or cheaper could be an option.

The costs can be high though, with agent fees, removal costs and stamp duty to consider. Read more about property downsizing.

Benefits and grants

Those on a low income who are borrowing for home improvements or conversions to deal with disability may qualify for local authority grants.

Using equity release to pay for care in later life

If you need to pay for extra care and support in later life, equity release is one funding option to consider. However, there are some important factors, and potential drawbacks, to consider.

Most lifetime mortgage schemes will have a condition that if you permanently move into a care home, the funds will have to be repaid.

Releasing equity could affect your chances of getting local-authority funded care in your home. And if you already get local-authority care, you might have to start contributing to the costs from the equity you’ve released.

You may be allowed to move house without paying back the equity, but the property you move to will have to comply with criteria set down by the provider. This may limit your options. Some types of properties, such as sheltered housing for example, may not be acceptable to the provider.

Will you be allowed to have other people live with you (such as live-in carers or family members)? Some home reversion schemes may have conditions that prevent this.

Read more about your options for paying for care at home in later life.

Where can I get equity release advice?

Before using equity release, seek professional advice. Advisers should hold ER1, CeMAP and CeRER qualifications. You can find these through the Society of Later Life Advisers.

The Which? Money Helpline has a team of qualified experts that can help answer your questions on equity release. Try Which? and speak to one of our experts.

A free alternative is the charity StepChange, which compares providers and can arrange an equity release deal for you through a StepChange Financial Solution’s adviser.

Tips for choosing the right equity release scheme

  • Speak to an independent financial adviser before deciding whether to take out an equity release scheme, and get independent legal advice.
  • Explore other options and find out how equity release would affect your entitlement to state benefits.
  • Borrow the minimum amount you need to or choose a drawdown scheme to give you the option to borrow money as and when you need it.
  • Consider taking out a scheme that lets you make interest payments each month if you can afford to.
  • Choose a scheme with no early-repayment charges or ones that apply only for a limited period.