Equity Release explained: is it right for you?

Equity release allows homeowners aged 55 and over to unlock some of the value tied up in their property without having to sell it and move out. For many retirees whose wealth is concentrated in their home rather than savings, it can be a way to fund retirement, help family, or pay for home improvements and care costs.

The two main types. A lifetime mortgage is by far the most common form — you borrow against your home while retaining full ownership, and the loan plus rolled-up interest is repaid when the property is eventually sold, usually after death or a move into long-term care. A home reversion plan involves selling all or part of your home to a provider in exchange for a lump sum or income, while retaining the right to live there rent-free for life — these are much less common today.

The key trade-off. Because interest compounds (rolls up) over time rather than being paid monthly, the amount owed can grow substantially over a 10-20 year period. This reduces the inheritance you leave behind and can affect means-tested benefits. Most modern plans include a "no negative equity guarantee", meaning your estate will never owe more than the property is worth when sold.

Things to consider before proceeding:

• How will it affect any means-tested benefits you receive?
• What impact will it have on the inheritance you wish to leave?
• Are there cheaper alternatives, such as downsizing?
• Is the provider registered with the Equity Release Council, which guarantees certain consumer protections?

Equity release is a significant, largely irreversible financial decision. It should only ever be taken out after speaking to a qualified, FCA-regulated equity release adviser, who is legally required to ensure it's suitable for your circumstances.