Equity release lending on the rise: should you unlock cash from your home?

Homeowners in the UK borrowed £636m against their properties in the second quarter of 2025 – an increase of 10% compared to the same period last year.

This is despite higher borrowing costs: the average APR for an equity release loan was 7.24% between April and June, up from 6.64% a year ago, as gilt yields continued to rise. 

Here we explain how equity release works and what you need to consider before using it. 

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More people turning to equity release to free up cash

The latest quarterly report from the Equity Release Council shows that housing equity was accessed by a total of 14,404 customers between April and June 2025 – up by 1% year on year. 

David Burrowes, chair of the Equity Release Council, said that growth in the sector 'continues to be driven by new borrowers accessing greater amounts of housing equity to manage debt, boost income and support their wider families'.

Equity release is a way for over-55s to access some of the money in their home, while continuing to live there.

Lifetime mortgages are the most popular type of equity release. You take out a loan against your property, which is repaid from the proceeds when it is sold.

The maximum you can borrow will vary from provider to provider. Currently, at age 65, you'll typically be able to borrow between 35% and 39% of the market value of your home, rising to between 40% and 44% at age 70.

• Find out more: what is equity release?

Drawdown plans growing in popularity

With equity release, you can opt to take a lump sum – where interest is charged on the whole amount at a fixed rate – or take chunks of cash when you need it, only paying interest on the money you've taken (known as 'drawdown').

More than half of borrowers opted for the flexibility of drawdown products in the second quarter of 2025. On average, they released an initial amount of £65,856, with an average reserve amount of £53,338 agreed for future use.

New drawdown customers are continuing to take smaller percentages of their total loans upfront – between 50% and 60% during 2024, compared with 70% and more during 2021 and early 2022.

Meanwhile, those opting to borrow a lump sum took an average of £126,422 – up 14% year-on-year.

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Pros and cons of equity release

Taking money from your home can be useful if you have value tied up in your property but are worried about having enough to live on in retirement or to cover care costs. 

Releasing money in this way does come with potential downsides. Not making any repayments on your loan will mean you end up paying far more than you’ve borrowed due to the compounding of interest. This could mean the value of your property is wiped out entirely.

An equity release loan will most likely reduce the size of your estate and the amount you can leave behind for loved ones, as the lender is repaid before the rest is divided among beneficiaries. For this reason, it's a good idea to discuss with your family first. 

Before using equity release, you will need to get regulated advice from a qualified equity release adviser. This is a requirement of the Financial Conduct Authority.

The Equity Release Council has a directory of financial advisers with equity release experience. 

• Find out more: how does equity release work?

Alternatives to equity release

Equity release is more likely to be suitable if you’re older, own an expensive property outright that’s expected to increase in value, and you don’t intend to pass it on when you die. 

If you decide that equity release isn’t for you, here are some alternatives: 

• Downsizing Our investigation found that you can potentially unlock hundreds of thousands of pounds by moving to a smaller property, even after paying stamp duty.
• Remortgaging Increasing numbers of lenders offer retirement interest-only mortgages (RIOs). These allow you to pay off the interest on the loan each month, and the original value of what you borrowed is repaid when you die or move out.
• A personal loan or credit card For smaller amounts, borrowing via an unsecured personal loan or interest-free purchase credit card could be much cheaper than equity release, as long as you can keep up with repayments.
• Rent a room If you have a spare room in your home that you’d be happy to rent out, the government’s Rent a Room scheme lets you earn up to £7,500 a year tax-free. The tax exemption is automatic, so you only have to fill in a tax return if you earn more than £7,500 in any year.