Don’t rush into equity release

It’s becoming increasingly popular to release cash from your home, says Emma Lunn. But it’s still a risky move.


(Image credit: Credit: Larry Lilac / Alamy Stock Photo)

It's becoming increasingly popular to release cash from your home, but it's still a risky move.

Almost 40,000 households used equity-release products in the first half of 2018, according to figures from the Equity Release Council (ERC), an industry body. This included 21,490 new plans, an increase of 28% from 16,805 in the same period last year.

This growth has apparently been driven by product innovation and increased flexibility, reckons the ERC, with the number of equity-release products on the market more than doubling in the past two years. (Presumably the increase in how much people's houses are worth has fuelled uptake too.) Yet despite its apparent popularity, using your home as a cash machine to fund your retirement or help your kids buy a house can be a risky move.

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Equity release allows homeowners to access capital held in their homes, normally through products like a lifetime mortgage or home-reversion scheme. A lifetime mortgage involves borrowing money secured against your home, while retaining ownership. You pay interest onthe amount borrowed generally this is added on to the total, pushing up the amount you owe, though some plans let you repay as you go.

When you die or move into long-term care, the home is sold, and the money from the sale used to pay off the loan. With a home-reversion scheme, you sell all or part of your home in return for a cash lump sum, a regular income, or both.You can then live in the home until you die.

While the majority of equity-release providers are insurers or specialist companies, there are a couple of household names dipping their toes into the market, too. Building society Nationwide became the first high street name to enter the market at the end of 2017, while insurer Saga has recently launched a product which allows customers to take monthly tax-free payments from their property.

Saga's regular-drawdown lifetime mortgage is available to people aged 60to 80, in contrast to the majority of products that offer lump-sum payments. Borrowers must take an initial sum of £10,000, to be followed by at least £200 a month for a minimum of five years. Customers can review their plan each year and change the value of monthly payments or release further lump sums.

If you’d like to find out how much equity you could release from your home, or to find out more about equity release in general, visit our partners, UK Experts Online, for a free report.

Emma Lunn

Emma Lunn is a multi-award-winning journalist who specialises in personal finance and consumer issues. With more than 18 years’ experience in personal finance, Emma has covered topics including mortgages, first-time buyers, leasehold, banking, debt, budgeting, broadband, energy, pensions and investments. Emma’s one of the most prolific freelance personal finance journalists with a back catalogue of work in newspapers such as The Guardian, The Independent, The Daily Telegraph, the Mail on Sunday and the Mirror. As a freelancer she has also completed various in-house contracts at The Guardian, The Independent, Mortgage Solutions, Orange and Moneywise. 

She also writes regularly for specialist magazines and websites such as Property Hub, Mortgage Strategy and She’s particularly proud of her work writing about the leasehold sector and a Guardian front-page story about a dodgy landlord. She has a real passion for helping people learn about money – especially when many people are struggling to get by in today’s challenging economic climate – and prides herself on simplifying complex subjects.