Last updated 30 October 2026
Information, not adviceThis page explains how equity release works in general. It is not a recommendation. Equity release is not right for everyone: an adviser will look at your circumstances, your options and the costs before recommending anything, and you will need independent legal advice before any plan completes.
What is a lifetime mortgage?
A lifetime mortgage is a loan secured against your home for homeowners aged 55 or over. You keep owning your home and can live in it for the rest of your life. The loan, plus the interest, is usually repaid from the sale of your home when the last homeowner dies or moves into long-term care. Lifetime mortgages make up more than 99% of new equity release plans.
How it works
Lump sum
You take the money in one go. Interest is charged on the whole amount from the start.
Drawdown
You agree a total and take an amount at the start, then draw more when you need it. Interest is only charged on what you have taken.
Paying interest
Some plans let you pay some or all of the interest each month, or make voluntary repayments, so the amount owed grows more slowly.
How much you can borrow
Mainly the age of the youngest homeowner and the value of your home. Try our equity release calculator.
How interest builds up
If you make no repayments, interest is added to the loan each month and is then charged interest itself. At 6.25% MER, the lowest advertised rate in September 2026, £50,000 would grow to about £93,261 after 10 years and £173,952 after 20 years. See current rates and costs.
Things to think aboutEquity release will involve a home reversion plan or a lifetime mortgage, which is secured against your property and will reduce the value of your estate and impact funding long-term care. Equity release requires paying off any existing mortgage. Any money released, plus accrued interest, would be repaid upon death, or moving into long-term care. Releasing equity may affect your entitlement to means-tested benefits.
Equity Release Council standards
Plans from members of the Equity Release Council must include these protections.
No negative equity guarantee
You or your estate will never owe more than the value of your home when it is sold.
Right to remain
You can live in your home for life, or until you move into long-term care, as long as you keep to the terms.
Right to move
You can move to another property if it meets the lender’s criteria.
Fixed or capped rate
The interest rate is fixed for life or has a fixed upper limit.
Independent legal advice
You must get advice from a solicitor of your choice before the plan completes.
Penalty-free repayments
Newer plans let you make voluntary repayments, within the lender’s limits, without an early repayment charge.
Things to think about
Your estate
The amount owed is repaid from your home, so there will be less to leave to your family.
Benefits
Money you release could affect means-tested benefits.
Other options
Downsizing, other later-life mortgages, savings or help from family may suit you better. An adviser should look at these with you.
Free guidance
Impartial guidance is available from MoneyHelper, the government-backed money guidance service.
Sources
- Lifetime mortgages more than 99% of the market: Equity Release Council market data, 2026.
- Lowest advertised rate of 6.25% MER: publicly advertised rates checked 27 September 2026, Trusted Equity Release.
- Product standards: Equity Release Council, “Our standards”.
- Minimum age and how lifetime mortgages work: MoneyHelper, “What is equity release?”.
Figures are checked when the page is updated and can change. Your own figures will come from the lender and your adviser.