Our founder Laura was on BBC Morning Live to talk about equity release, a topic more and more families are weighing up as living costs rise and so much wealth sits tied up in homes. If you missed it, here’s what you need to know.
What is equity release?
Equity release lets homeowners aged 55 and over unlock cash from the value of their home without having to move out. The most common type is a lifetime mortgage: you borrow against your property, and the loan plus interest is usually repaid when you die or move into long-term care, typically from the sale of the home. You keep living there and you keep owning it. People use the money for all sorts of things, from topping up retirement income to home improvements or helping children onto the property ladder.
It’s borrowing, not free money
The biggest thing to remember is that equity release is a loan, and it can be an expensive one. With most lifetime mortgages you don’t make monthly repayments, so the interest rolls up and compounds year after year. That means a £20,000 loan could grow to more than £80,000 over 24 years.
If you or your family are considering it
- Talk to a specialist adviser. You must get regulated financial advice before taking out equity release, and a good adviser will look at alternatives too, like downsizing or a standard mortgage.
- Check the safeguards. Look for a plan that meets Equity Release Council standards, including a no negative equity guarantee, so you’ll never owe more than your home is worth.
- Think about the knock-on effects. Releasing cash can affect means-tested benefits and will reduce any inheritance, so it’s worth having an open conversation with family before you commit.
- Ask about flexibility. Some plans let you make voluntary repayments to keep the interest down, or draw money in smaller amounts only as you need it.
Watch Laura on BBC iPlayer
You can catch Laura’s full segment on BBC iPlayer here. And if equity release is on the table for you or someone you love, take your time, ask plenty of questions and get proper advice first.
The content produced by Financielle is for informational and educational purposes only and does not constitute financial advice.