The amount of money being withdrawn via equity release has jumped 4% year-on-year and continues to climb amid sticky inflation and upcoming changes to inheritance tax rules.
A total of £639 million worth of housing equity was taken out by customers in the third quarter of 2025, up from £615 million in the same period last year, according to the Equity Release Council’s (ERC) latest quarterly report.
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There are two main types – lifetime mortgages and home reversion plans.
Home reversion plans involve you selling a part of your property in return for a tax-free lump sum, then living in your home as a tenant rent free. This reduces the value of your estate as you’ve sold off a part of your home but it means there is no debt to repay like with a lifetime mortgage.
If you want to take out a lifetime mortgage, you don’t necessarily need to have paid off your mortgage, but will usually need to be aged over 55.
Money taken through both these forms of equity release can be taken as a lump sum, or via regular payments known as ‘drawdown’.
There were 14,281 plans taken out in Q3 last year while 13,158 were taken out in Q3 this year – an 8% difference.
The average lump sum amount taken out via equity release in Q3 2025 was £116,507.
The amount of money taken by homeowners via equity release in the second quarter of 2025 rose by 10% year-on-year, with £636 million worth of cash unlocked.
However, this was down from £665 million being unlocked in the first three months of this year - up 32% compared to the year before.
Are people releasing equity to avoid inheritance tax?
Some experts believe the increase in people taking out equity from their homes is down to the upcoming change to inheritance tax rules which will see pensions included in estates from April 2027 and any potential announcements in this month’s Budget.
Nick Flynn, retirement income director at Canada Life, said: “Recent tax changes and the upcoming Autumn Budget may be prompting individuals to take stock of their financial planning strategies.”
Others believe the increase could be down to inflation eroding people’s real wealth. The Consumer Price Index (CPI) measure of inflation currently sits at 3.8%, over the Bank of England’s (BoE) 2% target.
Sarah Coles, senior personal finance expert at Hargreaves Lansdown, said: “It could simply be down to inflation.
“People may have found their costs have grown beyond the reach of their pension and need another solution."
Pros and cons of equity release
Coles said lifetime mortgages, the most typical type of equity release, can work for people who can’t meet everyday living costs from their pension while retirement interest-only mortgages, a third type of equity release, can provide a one-off cash injection to cover a home improvement or healthcare.
David Forsdyke, head of later life finance at Knight Frank Finance, said equity release via drawdown can allow you to top up your income steadily to cover the cost of living too, and interest is only charged on the cash you’ve actually taken.
However, both warned there are significant risks attached to equity release as a means of accessing cash.
Coles said it can stop you from downsizing later on if the debt built up on the loan has significantly eaten into the equity of your home by the time you come to sell up.
Forsdyke added interest rates for lifetime mortgages are currently around 2% to 3% higher than ordinary mortgages.
Left to compound, this can mean less left behind for your beneficiaries when you die.
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