Understanding Equity Release
A guide to accessing the value tied up in your home.
Important Disclaimer
We have written this page as a general overview. It is not financial, legal, or tax advice. Equity release is either a lifetime mortgage or a home reversion plan, and both carry risks you need to understand fully. Talk to a qualified equity release adviser before going any further. Keystone Estate Planning does not arrange or sell equity release products.
What Is Equity Release?
Accessing Home Equity
If you are 55 or older, equity release lets you turn part of your home's value into cash while you carry on living there.
Lifetime Mortgages
The most common type. You borrow against your home and interest builds up over the years. The whole amount, loan plus accumulated interest, gets repaid when you die or go into long-term care.
Home Reversion Plans
You sell a share of your home (or all of it) to a provider and receive either a lump sum or regular payments. You keep the right to live there rent-free for the rest of your life.
How It Typically Works
The general process for considering equity release
Get Expert Advice First
Your first step is a meeting with an adviser who holds Equity Release Council (ERC) accreditation. This is a legal requirement.
Property Valuation
A surveyor values your home. Most providers will not consider properties worth less than around £70,000.
Choose Your Plan
Based on your adviser’s recommendation, choose between a lifetime mortgage or home reversion plan.
Funds Released
You can usually take the money as one lump sum, draw it down in smaller chunks as needed, or receive it as regular income. It depends on the plan.
Key Things to Consider
Equity release is a significant financial decision. Consider these important factors carefully.
Compound Interest
With lifetime mortgages, interest compounds over time. The amount owed can grow significantly, reducing the value of your estate.
Inheritance Impact
Because equity release reduces what your estate is worth, there may be less to leave to your family when you die.
No Negative Equity Guarantee
ERC-approved plans guarantee you will never owe more than your home sells for. Even if the debt grows beyond the property value, you are protected.
Impact on Benefits
Receiving a lump sum could affect your entitlement to Pension Credit, Council Tax Reduction, and other means-tested benefits. Raise this with your adviser early on.
Moving Home
Planning to move at some point? Find out whether the plan is portable to a different property. Not all of them can.
Qualified Advice Is Required
By law, you must receive advice from a qualified equity release adviser. This is not optional — it is a regulatory requirement designed to protect you.
You Need Qualified Advice Before Proceeding
Equity release affects your home, what you can leave to your family, and potentially your benefit entitlements. By law, you must speak to a qualified adviser before going ahead. Firms that belong to the Equity Release Council follow a strict code, including the no negative equity guarantee.
We help with Wills and Lasting Powers of Attorney. Equity release is outside what we do at Keystone Estate Planning.
Protect Your Estate
Whether or not you're considering equity release, a will and lasting power of attorney help protect your family's interests.