Equity release
Equity release is a later-life housing finance product in the United Kingdom that allows homeowners to access money tied up in their home equity while continuing to live in the property. The most common forms are lifetime mortgages and home reversion plans. The loan and interest are repaid from the sale of the home after the borrower dies or moves into long-term care. In the United States, comparable products are described as reverse mortgage loans.
Equity release is marketed to older homeowners and can reduce the value of any inheritance and affect eligibility for means-tested benefits. In a lifetime mortgage, interest may be added to the loan balance over time, so the debt can grow substantially if no repayments are made. The Equity Release Council's standards include a no negative equity guarantee, meaning that the borrower or estate will not owe more than the property is worth when it is sold. Equity release products are regulated by the Financial Conduct Authority, and consumer guidance recommends seeking specialist authorised advice before entering a plan.
Overview
Equity release is later-life housing finance that allows homeowners in the United Kingdom to access some of their property's value while continuing to live in it. It is available to homeowners aged 55 or over. The term covers lifetime mortgages and home reversion plans.The two main regulated structures are lifetime mortgages, where the homeowner borrows against the property, and home reversion plans, where the homeowner sells all or part of the property in exchange for a lump sum or income and the right to remain in the home. The amount owed is usually settled when the borrower dies or moves into long-term care, from the proceeds of selling the property.
Equity release transactions are regulated in the UK by the Financial Conduct Authority under the Mortgage Conduct of Business rules, including disclosure requirements for equity release illustrations. The FCA has also published thematic findings on the lifetime mortgage sales and advice process. Equity release can reduce the value of an estate and may affect eligibility for means-tested benefits, and interest on lifetime mortgages can accumulate over time if it is not paid as it accrues.
History
In parliamentary debate in 1991, members described a range of arrangements then marketed as equity release schemes, including home reversion schemes and roll-up loans, and noted low take-up while raising concerns about poorly designed products. In December 1991, a group of providers formed Safe Home Income Plans and published a voluntary code of practice which included a no negative equity guarantee and other consumer safeguards.Statutory regulation for mortgage-based equity release schemes, described as lifetime mortgages, was introduced from 31 October 2004. Home reversion plans became subject to the home finance regulatory regime for plans entered into on or after 6 April 2007.
Types of equity release
Lifetime mortgages
A lifetime mortgage is a mortgage loan secured on a home that usually does not need to be repaid until the borrower dies or moves into long-term care. The homeowner retains ownership of the property, and interest may be added to the loan balance over time if it is not paid as it accrues. Providers may offer different ways to take the money, including a lump sum or staged withdrawals through a drawdown facility. FCA glossary material describes a lifetime mortgage as a later-life mortgage intended to be repaid from the sale of the property rather than through a fixed repayment schedule.Lifetime mortgages may be marketed as meeting the Equity Release Council's standards, which include a no negative equity guarantee and expectations about features such as the ability to move home and the option to make repayments within specified conditions.
Home reversion plans
A home reversion plan is an arrangement where a homeowner sells all or part of their home to a provider for a lump sum or regular income and a right to remain in the property, often under a lifetime tenancy, until death or a move into long-term care. The amount offered can be significantly below the market value of the share sold, reflecting that the provider cannot sell the property until it is permanently vacated. When the property is eventually sold, the proceeds are shared between the homeowner's estate and the provider according to their respective shares.Key features
Eligibility can depend on factors such as the applicant's age, the property value and the provider's requirements for property types and locations. The amount available is usually limited to a proportion of the property's value and may increase with the age of the borrower.How funds are taken
Lifetime mortgages may be taken as a single lump sum, or as smaller withdrawals using a drawdown facility, which can reduce the interest that accumulates compared with taking the full amount at the outset. Some products allow borrowers to make voluntary repayments, which can reduce the balance and the total interest paid, though charges may apply if repayment terms are not met.Home reversion plans provide funds in exchange for selling a share of the home, usually at a discount to market value, and the provider's share of the eventual sale proceeds reflects the share sold rather than the amount originally paid to the homeowner.
Interest and repayment
For many lifetime mortgages, interest is added to the loan balance over time if it is not paid as it accrues, which can cause the amount owed to grow. The loan is typically repaid when the last borrower dies or permanently moves into long-term care, usually from the sale proceeds of the home. Some products include early repayment charges if the borrower repays the loan before the usual repayment event.Safeguards and standards
In the UK market, products that meet the Equity Release Council's standards include a no negative equity guarantee, meaning the borrower or estate will not be required to repay more than the sale value of the property. The standards include expectations around communicating the effect on inheritance, allowing the borrower to move to another suitable property, and providing the option to make repayments within specified conditions.Market
Equity Release Council market data reports cover new plans, drawdowns from existing reserves and further advances, based on aggregated returns from UK providers and advice firms. The Council has reported that lifetime mortgages make up more than 99% of the UK equity release market.Activity and customer numbers
In 2024, the Council reported total annual equity release lending of £2.3 billion, compared with £2.6 billion in 2023. In Q4 2024, it reported £622 million of lending with 15,073 customers active in the quarter, including 5,361 new customers and 8,301 returning drawdown customers. In Q2 2025, the Council reported £636 million of lending across 14,404 total plans, including 5,319 new plans.Further advances are additional borrowing by existing customers. The Council reported that further advances accounted for less than 7% of the total amount borrowed in Q2 2025, though the number of further advance plans was higher than a year earlier.
Product mix, loan sizes and pricing
The market includes lump sum lifetime mortgages and drawdown lifetime mortgages, where an initial amount is released and a reserve facility is agreed for later use. The Council reported that drawdown products accounted for 56% of new plans in Q4 2024 and 55% of customers in Q2 2025. It reported average new loan sizes in Q4 2024 of £115,243 for new lump sum plans, £70,926 for new initial drawdowns and £56,565 for new drawdown reserve facilities.The Council reported that the average APR of new products launched in October 2024 was 6.47%, compared with 7.48% a year earlier, based on data from Advise Wise. In Q2 2025, it reported an average APR of 7.24% and stated that more than 1,669 plans were available for advisers to choose from at the end of June.