If you’re over 55 and own your home, you’ve probably heard the term equity release—maybe on the radio, TV ads, or through a friend. But what exactly is equity release, and more importantly, is it a good idea?
Equity release can be a powerful financial tool for some people and completely the wrong choice for others. In this blog, we’ll explore what equity release is, how it works, the pros and cons, and who it might be right for—so you can make a confident and informed decision.
What Is Equity Release?
Equity release is a way for homeowners aged 55 and over to unlock some of the cash (equity) tied up in their property, without having to sell or move out. The money you release is tax-free and can be taken as a lump sum, in smaller instalments, or a combination of both.
The most common form is a lifetime mortgage, which is a loan secured against your home. You keep full ownership, and the loan is usually repaid when you die or move into long-term care—typically through the sale of your property.
How Much Can I Release?
The amount you can release depends on several factors:
- Your age (older applicants can usually release more)
- The value of your home
- Your health and lifestyle (some providers offer enhanced plans for certain conditions)
- Whether you want to leave an inheritance
As a general rule, you can release between 20% and 60% of your home’s value, depending on your circumstances.
What Can I Use the Money For?
One of the benefits of equity release is that you can use the money however you like, including:
- Home improvements or renovations
- Paying off an existing mortgage or debts
- Helping children or grandchildren onto the property ladder
- Boosting retirement income
- Taking that dream holiday or buying a new car
The freedom to spend the money as you wish is one of the reasons equity release appeals to many homeowners.
Is Equity Release a Good Idea? Pros and Cons
Let’s break down the advantages and disadvantages to help you decide if it’s the right move for you.
✅ Pros of Equity Release:
- Access to tax-free cash
You can release a lump sum or regular payments without having to downsize or move. - Stay in your home
With most plans, you retain full ownership of your property and can live there for life. - No monthly repayments (unless you want to)
You’re not required to make monthly repayments, although some flexible plans allow you to do so voluntarily, which can reduce the overall interest cost. - Inheritance protection
Many equity release plans now offer the option to ringfence a portion of your home’s value to leave to loved ones. - Regulated and safe
All equity release plans we recommend are regulated by the Financial Conduct Authority (FCA) and meet the Equity Release Council’s strict standards, including the ‘no negative equity guarantee’.
❌ Cons of Equity Release:
- It reduces your estate
Equity release reduces the value of the estate you leave behind, which may affect any inheritance. - Interest builds up
Unless you choose to make repayments, the interest is compounded, meaning it grows over time and can eat into your remaining equity. - Potential impact on means-tested benefits
Releasing a lump sum could affect your eligibility for certain state benefits such as Pension Credit or Council Tax Support. - Early repayment charges
If you repay the loan early, you could face hefty penalties—so this is not ideal if your circumstances are likely to change.
*Equity Release & Lifetime Mortgages will reduce the value of your estate and can effect your eligibility for means tested benefits.
Who Is Equity Release Right For?
Equity release may be a good idea if you:
- Are aged 55 or over and own your home
- Want to stay in your property for the rest of your life
- Need access to extra cash in retirement
- Don’t mind reducing the value of your estate
- Have limited income but significant home equity
It may not be suitable if:
- You plan to move home soon
- You’re eligible for other affordable lending options
- You want to leave the maximum inheritance possible
- You receive benefits that could be affected by a cash lump sum
Top Tip: Speak to a qualified equity release adviser before making any decisions. They’ll look at your full financial picture, explain the alternatives, and make sure it’s the right fit for your future plans.
Alternatives to Equity Release
Before committing, consider other options, such as:
- Downsizing to a smaller property
- Remortgaging or taking out a retirement interest-only (RIO) mortgage
- Using savings or investments
- Asking family for financial support
A good adviser will talk you through all the possibilities—not just equity release.
Common Questions We Get Asked:
Q: Will I still own my home?
Yes. With a lifetime mortgage (the most common equity release product), you retain full ownership.
Q: Will I owe more than my home is worth?
No. Plans that meet Equity Release Council standards come with a no negative equity guarantee.
Q: Can I move house after releasing equity?
Yes, most plans are portable. But it depends on the lender and the new property.
Final Thoughts
So, is equity release a good idea? The answer depends on you—your goals, lifestyle, and what you want for your future. For some, it’s a fantastic way to unlock financial freedom in later life. For others, there may be better options available.
At HLC Mortgages, we’re here to guide you through it all. We offer honest, professional advice tailored to your needs and we’ll always help you weigh up the pros and cons—without the pressure.
Thinking About Equity Release? Let’s Talk.
Book a free, no-obligation initial chat with one of our experienced advisers today.
We’ll explain everything in plain English and help you make the best choice for your future.