How Does Equity Release Work

Want to know how much you can release?

Use our

How Does Equity Release Work

A Comprehensive Guide to How Equity Release Works in the UK

Equity release is the service that’s made available to people that are over 55, which enables them as homeowners to access the capital accumulated in the value of their property.

So, here's the deal...

You can choose to receive the funds as instalments or withdraw it as a cash lump sum. Most equity release plans will enable you to gain access to this capital, including you releasing an equity loan and using your property as an establishment for the security of the loan, or you can sell some shares of the house if not the whole.


Your choices range between drawing a lifetime mortgage and selecting a home reversion plan. You will have various reasons for stimulating your decision to consider the options of getting an equity release. Perhaps you might need to make some renovations in your home, help your family with some finances, or even increase your income to enhance your financial status during retirement.

How Does Equity Release Work

First, ensure to understand how equity release works to use it to your advantage.

What is equity?

Equity is the total market value held in your home, less all outstanding mortgages or debts that you have secured using it.

Think about it...

The equity held in your home experiences increments as time passes, even as you make regular repayments and the value of your property increases. The total amount that you can release as equity differs regarding your age and some particular considerations, like health.

How Equity Release Works

For you to get any consideration when applying for an equity release plan, be at least 55 years and above, and you must be the sole owner of a property with a value that can be proportionate to the equity loan you desire.

What's next?

You can receive the equity release as one cash lump sum or in sizeable payments. You can spend the funds on how your needs. Although, you must first consider clearing any outstanding debts, using the equity release funds to clear these off. Then you can utilise the rest to get anything you need, for instance, to go on your dream holiday or merely to fund your home renovation projects.

And as if that’s not enough:

Remember, the equity you release is tax-free and yours to spend as you please. Some equity release plans provide you with the option to pay off the interest as monthly instalments; although there are still many options when that’s unnecessary.

In case you've been wondering...

A lifetime mortgage has emerged strongly as the most popular mode of equity release. It enables you the privilege of repaying your loan, along with interest, after the brokers sell your house. An action that usually takes place after you move into permanent residential care or are deceased.

How Long Does Getting an Equity Release Take?

It takes an average of 8-12 weeks from the time you apply until your equity release gets processed and completed for payment.

Keep track of the timeframe...

Getting yourself in the hands of a reputable equity broker to help manage your equity release. The broker will ensure that the process runs smoothly and you get your money released with little stress; in the quickest way possible.

The Process of Equity Release

The specific process that you’ll experience as you engage in equity release will vary depending on you as a client and the different brokers that you may choose.

Wonder how does the equity release process start?

Initially, you’ll meet with a professional equity release adviser or broker to discuss your eligibility.

Then, you’ll set an appointment for a follow-up meeting in which you will now debate on your ideas and thoughts regarding the advice you initially got. Afterwards, you can apply, your adviser will oversee that, and when everything gets approved, you will receive your finds.

Important Equity Release Schemes

There are two significant categories of equity release plans which you have to pick from when you want to access the equity valued in your home but not sell it.

A Lifetime Mortgage

A lifetime mortgage is a tax-free loan received as a predetermined amount that’s secured using your property as leverage. Most homeowners in the UK that are 55 and beyond are eligible to apply, and they have this as an available option.

Now, what does it mean for you?

You can keep complete ownership of your property minus them requiring you to make any monthly repayments when you release equity as a lifetime mortgage. The total amount of money together with interest accumulated is due for repayment after you you shift into permanent residential care, or you die. And your property gets sold, then the debt gets repaid, and any surplus money goes to your estate.

A Home Reversion Plan

When you release equity using a home reversion plan, they give you access to a tax-free lump sum or as continuous income flowing form you selling a portion of your home, if not all of it. A home reversion equity release is a service commonly available for property owners that are 65 and above.

Give it a thought...

Although, you consider that the amount you’ll receive as a payment from your broker will be below the market value of your home because you keep the right to continue occupying your home. You can remain accommodated in your house minus without paying rent until you move into permanent care or are deceased.

How Does Equity Release Work

When that time comes...

The property will get sold, and they will put the value of your share into your estate. This way, you can keep track of the exact percentage in the value of your home that’ll go to your beneficiaries as their inheritance after your passing.

Who Regulates Equity Release?

Every equity release plan, broker, and financial adviser is subject to the regulations defined by the Financial Conduct Authority (FCA). You note that all reputable equity release brokers are members of the Equity Release Council, and they must adhere to its standards.

What's more?

The ‘no negative equity guarantee’ stands as one of the most significant regulations, where you’ll not need to repay more interest than the value calculated on your home at the initial sale.

How Equity Release Affects State Benefits

It’s necessary to understand that equity release may have some effects on your entitlement and eligibility to maintain particular state benefits, whether you are currently utilising them or hope to receive some in the future.

It's true...

After releasing equity, you might find that the services you receive might reduce, or perhaps you might even lose access to them. Some benefits in question include: access to universal credit, Council tax-support, and Income support

The Best Equity Release Advice

Equity release is a significant financial commitment involving your property, and thus it’s not a decision that you must make without thorough examination. Your home is a valuable asset that may form a significant part of your estate and also provides you with inexhaustible shelter and security.

Now, a simple way is to:

You ensure that you get professional advice from reputable experts that will help you carefully consider every facet involved.