UK Homeowners Over 55 Are Using Their Property to Unlock Extra Cash — Here’s How
In the UK, more homeowners over 55 are turning to equity release to access funds tied up in their property. Without selling or moving out, many are exploring how they can boost their income in retirement by unlocking part of their home’s value. Here's what to know in 2025.
How Equity Release Works for Over 55s in the UK
Equity release is a way for homeowners aged 55 and above to unlock a portion of their property’s value while retaining the right to live in their home. The most common types of equity release are lifetime mortgages and home reversion plans. With a lifetime mortgage, you borrow a lump sum or receive regular payments secured against your home. The loan, plus interest, is repaid when you die or move into long-term care. Home reversion involves selling a part or all of your property to a provider in exchange for a lump sum or regular payments, while continuing to live in the home rent-free.
Ways to Unlock Home Value Without Selling
While equity release is one option, there are several other ways to access the value of your home without selling it outright. These alternatives include:
- Downsizing to a smaller property
- Renting out a room or part of your home
- Remortgaging to release equity
- Taking out a secured loan
Each option has its own advantages and considerations, and it’s essential to carefully evaluate which approach best suits your individual circumstances and long-term financial goals.
Lifetime Mortgage and Home Reversion Explained
Lifetime mortgages are the most popular form of equity release in the UK. With this option, you borrow against the value of your home, and the loan is repaid from the sale of your property when you pass away or move into long-term care. Interest is charged on the amount borrowed and can be ‘rolled up’ over time, meaning you don’t make any monthly repayments.
Home reversion plans involve selling all or part of your property to a provider in exchange for a lump sum or regular payments. You can continue living in your home rent-free for the rest of your life, but when you die or move out, the provider will receive their share of the property’s value.
Risks and Benefits of Equity Release in 2025
As we look towards 2025, equity release products continue to evolve, offering both potential benefits and risks to consider:
Benefits:
- Tax-free cash to supplement retirement income
- Ability to stay in your home
- No negative equity guarantee on most plans
- Flexibility to make partial repayments on some schemes
Risks:
- Reduced inheritance for your beneficiaries
- Impact on means-tested benefits
- Potential early repayment charges
- Compound interest can significantly increase the debt over time
It’s crucial to seek professional financial advice and carefully consider the long-term implications before proceeding with equity release.
Is Equity Release the Right Choice for Your Retirement?
Determining whether equity release is suitable for your retirement planning requires careful consideration of your financial situation, future needs, and alternatives. Factors to consider include:
- Your age and health
- Your income and savings
- Your property value and any existing mortgage
- Your retirement goals and lifestyle expectations
- Your desire to leave an inheritance
Equity release can provide financial flexibility in retirement, but it’s not suitable for everyone. It’s essential to explore all options and seek independent financial advice before making a decision.
| Provider | Product Type | Key Features |
|---|---|---|
| Aviva | Lifetime Mortgage | No negative equity guarantee, optional inheritance protection |
| Legal & General | Lifetime Mortgage | Flexible cash release options, fixed interest rates |
| More2Life | Lifetime Mortgage | Enhanced terms for medical conditions, downsizing protection |
| Pure Retirement | Lifetime Mortgage | Partial repayment options, no early repayment charges after 10 years |
| Hodge Lifetime | Home Reversion | Guaranteed minimum inheritance option, flexible cash release |
Equity release can be a valuable tool for some retirees, offering a way to access the wealth tied up in their homes. However, it’s a complex financial decision with long-term implications. Homeowners should carefully weigh the pros and cons, consider alternatives, and seek professional advice before committing to an equity release plan. As the market evolves, new products and regulations may emerge, potentially offering more flexible and tailored solutions for those looking to unlock their home’s value in retirement.
The shared information of this article is up-to-date as of the publishing date. For more up-to-date information, please conduct your own research.
