Borrowing / Mortgages

How Does Equity Release Work & Is it Right for You?

Equity release is a financial product that some homeowners over 55 use to unlock capital tied up in their property to boost their finances in later life. Equity release can be an effective way to improve quality of life in retirement, enable you to travel, fix up the house, or support your family financially, but there is also a lot that needs to be considered. This post will look at equity release and give you some key pointers to help you decide if it is right for you.

What is Equity Release?

Essentially, equity release involves taking out a loan against the equity in your home. This means that you can free up some of the money tied up in the home and use it for any purpose. You retain ownership of the home and can continue to live there, and repayment only commences once you pass away or move into full-time care.

How Can You Take Out Equity Release?

To take out an equity release, you need to be a homeowner and over the age of 55. It is a long-term financial commitment, so lenders will want to ensure that you have a realistic life expectancy so that you can manage the loan. To qualify, you will need to own the property outright or have a significant amount of equity accrued in the house. You can speak to an independent financial advisor or an equity release provider to discuss this financial product and see if it is right for you. It is also possible to use an equity release calculator to get an estimate of how much cash you could release.

What are the Benefits?

Equity release can be a useful source of money for people approaching retirement to improve their financial situation. Homes are normally the most valuable asset a person owns, and having money tied up can be frustrating, particularly if your finances need an injection. Equity release allows you to access some of this money which gives you the ability to improve your quality of life.

What are the Cons?

As mentioned, there is a lot to consider with equity release and you shouldn’t rush into it without taking time to understand how it impacts you and your wider family. First, the debt will increase due to interest—this means that the total amount owed could be much higher than the sum you borrow, particularly when interest rates remain high. Equity release will also reduce the value of your estate, which will impact the inheritance you leave to your beneficiaries.


Equity release can be a great option if you want to improve your quality of life in retirement. While it can affect inheritance, it could also be a way to provide financial assistance to family members while you are still alive. It might not be best for everyone, though, which is why some may find it better to look at alternative sources of borrowing options.

Equity release can be an excellent option for some, but not everyone. This is why it is always worth speaking to an independent expert who can explain the pros and cons based on your specific circumstances.

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