Are you stuck in a debt-filled rut, desperately searching for a way out, wondering if equity release is the best option.

Look no further! We might have the solution you've been looking for.

Equity release is becoming a popular alternative to traditional methods of funding retirement, and for a very good reason.

Due to rising costs of living and the increasing average age of retirement¹, many retirees have to sell off assets to cover day-to-day expenses.

We've combed the market, studied all regulated plan providers and now we're willing to share the inside scoop.

Is equity release truly the best option for retirees in 2025?

Find out now!

What is Equity Release?

Equity release is a financial arrangement for homeowners, typically aged 55 or older, to access the value of their property without selling it. The two main types are:

1. Lifetime Mortgage: A loan secured against your home, repaid when you die or move into long-term care, with you retaining ownership.
2. Home Reversion Plan: Selling part or all of your home to a provider in exchange for a lump sum or regular payments, while living in it rent-free or for a nominal rent until you die or move into care.

It's important to consider the impact on inheritance and seek professional advice.

Learn More: What's Equity Release in 2025?

Borrowing With Equity Release

Even when interest rates were low, it's never been easy to borrow money.

Banks are more conservative these days, and many people find that they do not meet lending criteria, often as a result of having a poor credit score.

Great news!

Your credit rating is generally not considered by most equity release lenders.

Instead, they'll look at your age, the condition of your health, the value of your property, and the remaining mortgage on your home.

You can still unlock equity from your home, even if you have a small mortgage remaining on your property.

You will use the funds released to pay back your mortgage and the balance will be available to you as a lump sum or a lump sum plus a drawdown facility.

It's also worth mentioning that equity release loans aren't a quick fix like credit cards or payday loans².

Home reversion schemes, in particular, will require you to hand over significant ownership of your home to receive funding.

Why Is There a Rise in Borrowing?

There are several reasons why the UK has seen such an increase in borrowing.

There's now less emphasis on lending criteria when deciding who can borrow money and from where.

This means that banks will be more likely to grant loans, even if they would not have done so before 2008.

This is because they don't want their customers to be locked out of credit should anything happen again as it did with the global financial crisis.

In addition, interest rates remain low, meaning that many people feel comfortable about taking on significant debt, knowing that repayments will still only consume a fraction of what they earn each month.

Warning!

This problem could worsen over time, though, as inflation gradually increases and erodes real incomes while living costs stay high.

There has been a shift in the attitude of households concerning debt.

Many people were cautious about taking on more borrowing before 2008.

Risk-taking has since increased, along with optimism that any difficulties will be resolved.

This being despite evidence showing that those who borrow too much are most likely to struggle when they retire and even find themselves forced into bankruptcy³.

Why Are the Interest Rates So Low?

In the wake of the global financial crisis, interest rates were made to be as cheap as possible for some stability to return.

Previously, banks made interest rates high.

This was often done by giving out payday advance loans, which are designed not to be repaid in one go, but rather on a series of smaller payments.

The intention was that borrowers needing urgent repayments would be more likely to request them from their bank, and consequently sustain interest rates at higher levels.

Many borrowers were unable to keep up with monthly repayments on credit cards, payday loans, or other forms of debt like mortgages.

They had been given money by these lenders who did not do enough due diligence when deciding whether those customers should have been granted credit in the first place.

However, things are better these days, but loans can cause mounting debt that isn't easy to repay. It's vital to look at all your options.

Are you over 55? Perhaps consider equity release!

What Makes Equity Release the Best Option?

The interest rates now are relatively low, so an equity release loan could be a good option for anyone who needs to borrow money now.

Annual interest can be available from 6.05%. View the most current rates here.

If you own your property, but have little cash, then equity release could be the solution you've been looking for.

Many financially vulnerable people will find themselves excluded from other forms of borrowing because they don't meet lending criteria in later life.

Great news!

You will have equity release options, even if you have a poor credit rating.

The key reason for this type of financing is that it doesn't involve much risk for lenders.

Your loan is paid back from the sale of your home when you die or move into long-term care.

Common Questions

In Conclusion

The rise in UK borrowing and a strained economy means that equity release is likely to be a good option for many people.

With an increase in life expectancy, it's essential to plan for your future. Perhaps take inspiration from these equity release alternatives.

In addition, if you're in a tough financial situation, we strongly suggest you get in touch with a financial adviser who can help you decide if equity release is the best option for you.