Equity Release and Lifetime Mortgages
Equity release can provide access to money tied up in a home, but it is a long-term commitment that can affect the estate, benefits, future care choices and the ability to move. Understand the implications and alternatives before making an enquiry.
- A loan secured against the home
- Interest may be added to the balance
- Estate value and benefits may be affected
- Specialist advice is required before proceeding
What Equity Release Means
Equity release is a broad term for arrangements that allow eligible homeowners to access value tied up in their main home while continuing to live there, subject to the plan's terms. It is a significant later-life financial decision and specialist advice is needed before proceeding.
The equity in a home is the difference between its value and any borrowing secured against it. Releasing some of that value creates a long-term commitment that can affect the estate, benefits, future care options and the ability to move.
Lifetime Mortgage and Home Reversion
Equity release generally takes one of two broad forms. Product availability and advice scope vary between providers and advisers.
Lifetime Mortgage
A loan secured against the home. The homeowner normally retains ownership. Depending on the plan, interest may be paid, partly paid or added to the balance. The loan is normally repaid after a specified later-life event or when the property is sold, subject to the contract.
Home Reversion
All or part of the home is sold to a provider in return for money or an income while the customer retains a right to remain under the plan. The amount received is normally below the market value of the share sold.
How a Lifetime Mortgage Balance Can Grow
Where interest is rolled up, compound interest means interest is charged on the original borrowing and previously added interest. The amount eventually repaid can be substantially higher than the amount released.
Initial loan Interest added Interest charged on the increased balance Balance can grow more quickly over time
Rates, payment options and charges are product-specific. This page does not show a personalised calculation or a hypothetical projection.
Potential Features and Important Risks
Whether any feature applies depends entirely on the specific plan and provider. The risks and limitations deserve equal attention.
Potential features, depending on the plan
- remain in the main home subject to plan terms;
- take a lump sum, drawdown or other supported release structure;
- choose from available interest-payment options;
- retain ownership with a lifetime mortgage;
- access applicable product protections.
Important risks and limitations
- interest can compound and increase the balance;
- estate and inheritance can be reduced;
- means-tested benefits and local-authority support can be affected;
- equity available for future care or housing needs can reduce;
- moving can be restricted by property criteria or portability terms;
- early repayment charges can be substantial or long-lasting;
- the home must normally remain the main residence and be maintained;
- other occupants or a younger partner may not have the same rights unless included appropriately;
- future borrowing choices may be limited;
- plan-specific guarantees and protections have conditions.
Equity release will reduce the value of your estate and may affect your entitlement to means-tested benefits and your future options. Interest can build up over time. A lifetime mortgage is secured against your home.
Alternatives to Consider
Equity release is not the only way to meet a later-life financial need. An alternative may be more appropriate, and none is automatically suitable. Discuss the options with an appropriately qualified adviser or relevant specialist.
- downsizing or moving to a less expensive home;
- using savings or other assets;
- a conventional residential mortgage or remortgage where affordable;
- a retirement interest-only mortgage where payments are affordable;
- grants or support for adaptations or repairs;
- help from family, with legal and tax implications considered;
- reviewing spending and benefits entitlement;
- free regulated debt advice where debt pressure is the main reason for considering equity release.
Impartial guidance is available from MoneyHelper. Where debt pressure is the main concern, free regulated debt advice can be found through MoneyHelper's debt-advice locator.
What May a Provider and Adviser Consider?
Providers and advisers weigh a range of general factors. These are illustrative and not a checklist of eligibility.
- age of the youngest applicant;
- property value, type, tenure, condition and location;
- existing mortgages or secured borrowing;
- amount and purpose of funds requested;
- household composition and occupancy rights;
- income, benefits, assets and alternatives;
- future plans, moving and care considerations;
- ability and preference to make interest or capital payments;
- product-specific criteria.
Meeting a provider's basic criteria does not establish suitability. TFS does not assess either eligibility or suitability.
Moving, Repayment and the Estate
- portability may be possible only if the new property meets provider criteria;
- downsizing protection, early repayment and inheritance protection are product features, not universal rights;
- joint and sole borrower events differ;
- repayment may occur on sale, death, permanent care, voluntary repayment or another contractual trigger;
- the estate normally deals with sale and repayment after the relevant event;
- independent legal advice is an important part of proceeding;
- wills, powers of attorney and occupancy of other household members may need separate legal consideration.
This information is general and does not constitute legal advice.
Questions to Ask a Partner Adviser
An appropriately qualified adviser can answer these questions in the context of individual circumstances.
- What alternatives have been considered and why?
- How will the balance change if no payments are made?
- What happens to benefits and future care options?
- What fees and early repayment charges apply?
- Can the plan move to another property and under what conditions?
- What product protections apply and who provides them?
- What happens for a joint application after the first borrower dies or moves into care?
- Can interest or capital payments be made?
- How could other people living in the home be affected?
- What independent legal advice is required?
What Happens After an Enquiry
TFS stops at the introduction. Any advice or recommendation is provided by Anderson Reed, not by TFS.
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You send your basic contact details to TFS.
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TFS passes the enquiry to Anderson Reed.
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An appropriately qualified Anderson Reed adviser may contact you and, if you choose to continue, explain the advice and application process.
Frequently Asked Questions
These answers explain equity release in general terms. The specific plan, provider and advice determine how any individual arrangement works.
What is equity release?
Equity release is a broad term for arrangements that let eligible homeowners access some of the value tied up in their main home while continuing to live there, subject to the plan's terms.
It is a significant later-life decision that can affect the estate, benefits and future options, so specialist advice is needed before proceeding.
What is a lifetime mortgage?
A lifetime mortgage is a loan secured against the home where the homeowner normally retains ownership. Depending on the plan, interest may be paid, partly paid or added to the balance.
The loan is normally repaid after a specified later-life event or when the property is sold, subject to the contract.
Is a home reversion plan the same as a lifetime mortgage?
No. With a home reversion plan, all or part of the home is sold to a provider in return for money or an income, while the customer retains a right to remain under the plan.
The amount received is normally below the market value of the share sold. A lifetime mortgage is a loan rather than a sale of a share of the property.
Do I have to make monthly payments?
It depends on the plan. Some lifetime mortgages allow interest to be rolled up with no monthly payments, while others allow or require interest or capital payments.
There is no universal answer, and payment options are product-specific.
How does compound interest affect a lifetime mortgage?
Where interest is rolled up, compound interest means interest is charged on the original borrowing and on previously added interest, so the balance can grow more quickly over time.
The amount eventually repaid can be substantially higher than the amount released. Rates and charges vary by product.
Will I still own my home?
With a lifetime mortgage the homeowner normally retains ownership, subject to the terms of the plan. With a home reversion plan all or part of the home is sold to the provider.
The exact position depends on the plan chosen and its conditions.
Can equity release affect benefits or care funding?
Yes, it can. Releasing money can affect entitlement to means-tested benefits and local-authority support, and can reduce the equity available for future care or housing needs.
The effect depends on individual circumstances, which is one reason specialist advice is important.
Can I move home after taking a lifetime mortgage?
Portability may be possible, but usually only if the new property meets the provider's criteria. Moving can be restricted by property criteria or portability terms.
Downsizing protection is a product feature on some plans rather than a universal right.
What is a no-negative-equity guarantee?
Where a plan includes a no-negative-equity guarantee, it can mean the amount owed will not exceed the proceeds from selling the property, subject to the plan's conditions.
This is a product-specific protection with conditions and applies only to plans that provide it. It should not be assumed for every plan.
What happens when the last borrower dies or moves permanently into care?
Repayment is normally triggered on sale, death, permanent move into care, voluntary repayment or another contractual trigger. Joint and sole borrower events differ.
The estate normally deals with the sale and repayment after the relevant event, in line with the contract.
What alternatives should be considered?
Possible alternatives include downsizing, using savings or other assets, a conventional mortgage or remortgage where affordable, a retirement interest-only mortgage, grants for adaptations, help from family, or reviewing spending and benefits.
No alternative is automatically suitable. Free regulated debt advice is available where debt pressure is the main reason for considering equity release.
Is a TFS enquiry an assessment or application?
No. Submitting an enquiry is not an application, eligibility assessment or recommendation. TFS is a lead-generation service and does not assess eligibility or suitability.
If you submit an enquiry, your details will be passed to Anderson Reed, whose appropriately qualified, FCA-authorised advisers may contact you.
Equity release will reduce the value of your estate and may affect your entitlement to means-tested benefits and your future options. Interest can build up over time. A lifetime mortgage is secured against your home.
Want to speak with a qualified equity-release adviser?
TFS can pass your enquiry to Anderson Reed. An appropriately qualified adviser may contact you to discuss your circumstances, alternatives and whether continuing to a full advice process is appropriate.
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You send basic contact details to TFS
The form takes only a moment and does not commit you to anything.
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TFS passes the enquiry to Anderson Reed
Anderson Reed is the FCA-authorised firm named in our disclosure.
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An Anderson Reed adviser may contact you
If you choose to continue, they can explain the advice and application process.
TFS Mortgages is a lead-generation service. If you submit an enquiry, your details will be passed to our partner Anderson Reed. Any equity-release advice, suitability assessment or personal recommendation is provided by Anderson Reed's appropriately qualified, FCA-authorised advisers, not by TFS.
Submitting an enquiry is not an application, eligibility assessment or recommendation.
Equity-release enquiry
Complete the form and your enquiry will be passed to Anderson Reed.
Submitting an enquiry is not an application, eligibility assessment or recommendation. Your enquiry is passed to Anderson Reed, whose appropriately qualified, FCA-authorised advisers may contact you.