The Guide to Using Equity Release

Your home is likely one of the largest assets you own, and for most homeowners it's also the least accessible one. Equity release lets you unlock some of that value without selling or moving out.

It's one option among several, and worth understanding properly before you choose it. The amount you can release depends on your age and your property's value; most providers require you to be at least 55, and the property must be your main home. If you still have a mortgage, the money released must first clear that debt, along with any early repayment charges.

How it works

The most common form is a lifetime mortgage: a loan secured against your home, similar in structure to a regular mortgage, except you make no regular repayments unless you choose to. Instead, the interest rolls up onto the balance, and the whole amount is repaid when you move into long-term care or pass away.

You can take the money as a single lump sum, as smaller regular payments through a drawdown facility, or as a mix of both. In the second quarter of 2026, UK homeowners released £597 million through equity release, according to the Equity Release Council, with the average new lump sum sitting at £113,779.

What you do with the money is entirely your choice. Common reasons include home improvements, clearing existing debt, funding retirement, gifting to family, or simply having a financial buffer. Housing costs, including mortgage payments, now rank as the second-largest expense for UK retirees, according to PensionBee's 2024 research, which is part of why clearing a mortgage before retirement is one of the more common uses of equity release money.

What it gives you

Access to money that's otherwise locked away. The average UK house price reached £299,253 in July 2026, according to the Lloyds House Price Index (formerly Halifax). For many homeowners, a meaningful share of their total wealth sits in a property they have no other way to draw on without selling.

The option to draw more later. A drawdown lifetime mortgage lets you take an initial amount and access further funds over time, rather than committing to a single release upfront. This suits circumstances where your long-term plans might need a further injection of cash, or where knowing you could access more if something went wrong matters as much as the money itself.

No requirement to make monthly repayments. Unlike a loan or further borrowing, equity release doesn't have to increase your regular outgoings. That can matter directly if your income is fixed or reducing, which it often is in retirement.

No need to move. You keep your home: the place, the community, the proximity to family, all the things a downsize would cost you. For many people this is the single biggest reason equity release appeals over the alternatives.

What it costs you

The debt compounds if you don't make repayments. This is the trade-off for the flexibility above. Because interest is added to a growing balance rather than paid off monthly, what you eventually owe can end up substantially higher than what you released. The table below illustrates this on a lump sum of £113,779, the current average, at 6.4%, a representative current lifetime mortgage rate, with a £999 arrangement fee added at the outset and no repayments made.

Illustrative only, calculated at a representative rate of 6.4%, compounded monthly, with no repayments made. Your actual rate, and therefore your actual figures, will differ. Ask for a personalised illustration before making any decision.

By year 15 in this example, the debt has grown to more than double the sum released. Most providers let you make repayments or pay off the interest if you want to slow that growth, and it's worth working out what that would mean for your budget before you decide either way.

It reduces what you leave behind. If passing on your home, or its full value, to family matters to you, this is the drawback that carries the most weight. Equity release reduces the value of your estate, and the amount owed grows the longer the plan runs. Most providers offer a no negative equity guarantee, meaning the amount you owe can never exceed your home's value when it's sold, so other assets you hold separately can still pass to your family untouched. But the home itself, or a significant part of its value, is the one asset this decision directly affects.

It can limit your options later. Once you've released equity, taking out further borrowing secured against the same property usually isn't possible. Moving home afterward is not ruled out, but it can be harder: the equity you've already accessed may leave you without enough left in the property to fund a new purchase outright.

It can affect means-tested benefits. If you currently receive, or might in future rely on, benefits that consider your savings and assets, releasing a lump sum could change your entitlement. This is worth checking specifically before you commit, since the effect varies by benefit and by circumstance.

Before you commit, know the alternatives

Equity release is one option among several, and depending on your circumstances, another may fit better.

Downsizing releases property wealth by selling and buying somewhere smaller or cheaper. It can also mean a home better suited to your needs later in life, at the cost of leaving your community and taking on the practical costs of moving.

A personal loan can raise money now without touching your property, provided your income supports the repayments, and keeps your full home value intact to pass on.

Remortgaging can release equity through a standard mortgage rather than a lifetime one, useful if you're funding something specific like home improvements, though your lender will assess affordability against your income and, in later life, your retirement date, and your monthly repayments will rise.

A retirement interest-only mortgage keeps your monthly outgoings to interest alone, lower than a full repayment mortgage, with the capital repaid when the property is eventually sold or you pass away. Rates on this type of mortgage can still change and affect your payments.

Your other assets may already hold the answer. A pension, investments, or savings might provide the boost you're looking for without touching your property at all. A financial review can show what depleting those assets now would mean for your plans later, which is often the clearest way to compare this route against equity release properly.

Deciding what's right for you

None of the options above is right by default, including equity release itself. The right one depends on what you're trying to achieve, what you want to leave behind, and how your circumstances might change over the years the plan will run.

If equity release is something you're considering, talk to us. We'll help you understand whether it fits your circumstances, work through a personalised illustration so you can see exactly what it would cost over time, and set it against the alternatives above before you decide anything.

Important information

This guide is provided by Pembroke Financial Planning Limited for general information only and does not constitute advice. The information is aimed at retail clients only.

Think carefully before securing other debts against your home.

A lifetime mortgage is a loan secured against your home. To understand the features and risks, ask for a personalised illustration. Equity release will reduce the value of your estate and may affect your entitlement to means-tested benefits. Your home may be repossessed if you do not keep up repayments on your mortgage.

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Sources

Equity Release Council, quarterly market report, Q2 2026.

Lloyds House Price Index (formerly Halifax), July 2026.

Equity Release Wise, representative lifetime mortgage rates, July 2026.

PensionBee, retirement spending research, August 2024.

Compound interest table calculated for illustration purposes only, based on the Q2 2026 average lump sum and a representative current rate.