Top 10 Equity Release Facts for 2025: Must-Know Information
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Key Takeaways...
- Equity release allows homeowners over 55 to access the value of their property as a lump sum or regular income, while retaining ownership.
- In the UK, equity release involves either a lifetime mortgage or a home reversion plan, enabling seniors to tap into their home's value without moving.
- The advantages of equity release include additional income and no monthly repayments, while the downsides involve reduced inheritance and potential impact on means-tested benefits.
- Equity release is generally safe for UK seniors, supervised by the Equity Release Council and regulated in the UK by the Financial Conduct Authority, but it is crucial to consider personal circumstances and seek independent advice.
- Costs associated with equity release include interest rates, arrangement fees, and potential early repayment charges, while risks involve debt accumulation and impact on inheritance.
Knowing these 2025 essential equity release facts will assist you in your equity release journey!
More and more homeowners over the age of 55 are using equity release to unlock the cash tied into their estate every year.
However, entering into an equity release plan without the right knowledge could be detrimental to your finances.
AND, if your are not aware of the facts, you could miss out on golden equity release opportunities.
In This Article, You Will Discover:
Through extensive market research and combing leading plans, we have put together the fifteen equity release facts about what equity release is and how it works.
Are you wondering what these are?
Therefore...
Know About Equity Release in 2025
Here is what you must know about equity release in 2025.
These fifteen facts will help you determine if these products are worthwhile under your circumstances.
1. You Can Make Multiple Withdrawals With Equity Release
You can make multiple withdrawals with equity release instead of just unlocking one big lump sum, should you wish to.
You can release equity with a lifetime mortgage in two ways:
- A single lump sum, generally to fund a big project, an investment, or pay for your dream holiday.
- A few smaller lump sums, should you wish to have a few large cash injections over a period of time. This can be done through a drawdown equity release plan.
2. You Can Pay Back the Interest on Your Loan
You can pay back the interest on your loan instead of letting it compound.
However...
Whilst there is no obligation, you can volunteer to pay back the monthly interest, stopping and starting whenever you wish.
By doing so, you decrease the amount owed when you pass away or when you need to move into permanent care and stop the interest from compounding.
Why is this good?
By reducing the amount owed on your equity release plan your family will pay less out of sale of your home and, in turn, could receive a larger inheritance.
3. Most Equity Release Products Have a ‘No Negative Equity Guarantee’
Most equity release products have a ‘no negative equity guarantee‘
This is a requirement set by the Equity Release Council1 to ensure that your family is not left with equity release debt when you pass away or move into permanent care.
In a nutshell, the guarantee ensures that any additional funds owed from your equity release will be written off if they exceed the resale value of your home.
Even if property prices plummet.
Basically, if your house is sold and the loan, plus interest, exceeds the sale price, your estate will not be liable for the shortfall.
If, however, there are leftover funds after the loan, plus interest, is covered, this income will go to your heirs.
The Equity Release Council is the body that supervises the equity release market.
It is vital when looking to release equity from your home to avoid any companies that are not members of the Council.
4. You Have the Right to Stay In Your Home
You have the right to stay in your home throughout the course of your equity release plan, according to the rules of the Equity Release Council.
Great news!
In other words, whether you go with a lifetime mortgage or a home reversion scheme, you will be allowed to live in your house until you pass away or move into permanent care.
5. You Do Not Need to Own Your Home Outright to Be Eligible for Equity Release
You do not need to own your home outright to be eligible for equity release.
Instead, you can still have a small remaining mortgage which you will need to repay from the proceeds of your equity release loan.
This will reduce the amount that you will have left to spend, but it also means you will not have any mortgage repayments to make.
6. Equity Release in 2025 Is Regulated by a Governing Body
Equity release is supervised by a governing body called the Equity Release Council with strict rules to ensure the protection of consumers.
It is also regulated in the UK by the Financial Conduct Authority (FCA).2
7. With a Lifetime Mortgage, You Retain 100% Homeownership
With a lifetime mortgage, you retain full ownership of your property.
You get to stay in your home and continue enjoying all it has to offer: security, stability, comfort, and pride of owning a valuable asset that is increasing over time.
8. The Cash Is Tax‑Free
The cash is tax-free with equity release and you will not need to pay any income tax or capital gains tax on the money you unlock.3
9. You Must Be at Least 55 Years Old to Release Equity in 2025
You will need to be at least 55 years old to release equity in 2025.
However, there is no maximum age requirement and generally, the older you are, the more you may be able to release.
10. There is a Minimum Property Value in 2025
There is a minimum property value for equity release in 2025.
Your home must be worth at least £70,000* to release equity – but in some cases, you can still access up to 60% of the value of your estate.
*The features mentioned and the amounts raised, are subject to the lender’s criteria, terms and conditions.
11. Lenders May Take Your Health and Lifestyle Into Account
Lenders may take your health and lifestyle into account with an enhanced lifetime mortgage.
They are designed for property owners with poor health.
Homeowners who qualify for these plans will obtain optimal interest rates and loan-to-value.
12. The Interest Rate Can Be Fixed for Life
Equity release interest rates are mostly fixed for life. However, some plans do come with capped variable interest rates.
The most recent equity release rates can be accessed here.
*While we regularly review our rates, these may have changed since our last update.
13. The Debt Will Not Be Passed On
Your equity release debt will not be passed on to your family members.
Instead, the loan and any compound interest are covered, usually from the sale of your home, when you pass away or enter long-term care.
14. A Solicitor of Your Choosing Will Aid with the Legal Aspects of Equity Release
A solicitor of your choice will assist you through the legal aspects of the equity release process.
Once you have found the equity release that suits your needs, an estate attorney will help you with the transfer and legal documentation.
15. You Can Ringfence an Amount as a Guaranteed Inheritance for Your Heirs
You can ringfence a specified amount of your property value as a guaranteed inheritance for your heirs.
This means that an amount or percentage of your property, specified by you, is protected and will not form part of your equity release loan.
Common Questions
What Are the Key Facts About Equity Release?
How Does Equity Release Work in the UK?
What Are the Pros and Cons of Equity Release?
Is Equity Release a Safe Option for Seniors in the UK?
What Are the Costs and Risks Associated with Equity Release?
In Conclusion
After learning these facts, are you still wondering: "is equity release a good idea in 2025?"
The short answer is yes.
Equity release can be an excellent financial plan to provide UK residents over the age of 55 with a stress-free retirement.
If you or your family are considering this route, you must think carefully, consider the pros and cons, and discover the essential equity release facts before making your final decision!