Exploring ways to release money from your house in the UK can provide significant financial relief and flexibility for homeowners.
This article outlines various methods, such as lifetime mortgages, home reversion plans, and remortgaging, to unlock the financial value tied up in your property.
The article will help you do the following:
Here are 7 key takeaways from this article:
Releasing cash from your home can be achieved through several financial strategies, each tailored to different needs and circumstances.
For those considering taking money out of their house, it’s crucial to understand the various methods available.
How to take money out of your house involves a careful assessment of your financial situation and the equity tied up in your property.
Whether it’s for home improvements, paying off debts, or enhancing your retirement lifestyle, the right strategy can provide significant financial relief and flexibility.
One popular method is through an equity release scheme, such as a lifetime mortgage or a home reversion plan.
A lifetime mortgage allows you to borrow money against the value of your home while retaining ownership, with the loan and interest typically repaid when the property is sold, usually as part of your estate or when you move into long-term care.
Alternatively, a home reversion plan involves selling a part or all of your property to a provider in exchange for a lump sum or regular payments, while granting you the right to remain living in your home rent-free until you pass away or move into long-term care.
Another option for releasing cash from your home is to remortgage, which involves switching your current mortgage to a new deal, potentially with a different lender, often to secure a better interest rate or to borrow more against the value of your property.
This can provide a lump sum of cash upfront, but it’s important to consider the terms of the new mortgage, as it may extend the debt period or increase monthly repayments.
For those not wishing to enter into a loan agreement, renting out a portion of your home, such as a room or an annex, can provide a steady stream of income.
Each of these methods comes with its own set of considerations, including the impact on your future financial situation and potential effects on inheritance, making it crucial to seek professional financial advice before proceeding.
Many homeowners ponder, ‘How can I release money from my house?’ or ‘Can I release money from my house?’ Thankfully, there are several equity release options available that cater to different needs and circumstances.
By exploring these options, individuals can unlock the financial potential of their homes without the need to sell.
Whether it’s through a lifetime mortgage or a home reversion plan, understanding the right approach depends on your financial goals and the level of income or lump sum required.
Equity release is a financial product which allows homeowners aged 55 and over to access the wealth tied up in their homes. It can be accessed as a one lump sum, as several smaller sums or as a combination of both.
The most common types of equity release products are lifetime mortgages and home reversion schemes
The amount which you can release depends on several factors, including the real time market value of your home, your age, and your health.
With most equity release plans, you do not need to make monthly repayments. This is because the loan, along with accumulated interest, is repaid when your house is eventually sold.
Although equity release may provide funds for immediate needs, it should mainly be considered as a long-term plan. Upfront costs such arrangement fees and early repayment charges apply, making it essential to seek advice before proceeding.
It’s also worth noting that all equity release plans should come with a ‘no negative equity guarantee’. This ensures that you’ll never owe more than your home’s worth, even if real estate prices fall.
Another way to release money from your home is to rent out a portion of it, such as a single room or a self-contained unit, rather than selling the property altogether. Although this option would provide the benefit of a regular income, it also includes noteworthy costs.
Firstly, you’ll need to assess if you are comfortable with sharing your home with a tenant, as well as your ability to cover the costs of possible renovations to make the area rentable.
This includes ongoing maintenance costs. You’ll also need to have knowledge of the legal responsibilities of being a landlord.
Whilst renting out part of your home can be a good way to generate extra income, it also requires effort and investment.
Therefore, you should consider whether the potential rental income outweighs the costs of landlord responsibility and the loss of privacy.
The question of ‘How do you take money out of your house?’ often leads homeowners to consider remortgaging as a viable option. By taking money out of the house through remortgaging, homeowners can access better interest rates and terms, potentially lowering their monthly payments while accessing the needed funds for various purposes, from debt consolidation to home improvements
If you own equity in your property, you might choose to remortgage to release equity.
Remortgaging is the process of taking out a new mortgage to pay off your current loan while using the money to make monthly repayments on your current mortgage. This can free up a cash lump sum that you can apply towards other goals.
Usually, homeowners remortgage because their mortgage deal is coming to an end or to access better deals because they now have more equity. However, another option is to borrow money against the property.
The loan to value ratio (LTV) is key when considering remortgaging. This refers to the amount which you want to borrow compared to the value of your property. Mortgage lenders tend to offer the best rates to those with a low LTV, as it poses less of a risk to them.
However, remortgaging isn’t ideal for everyone. For instance, if interest rates rise, your monthly repayments could increase significantly.
Just make sure you’ll be able to afford the higher repayments without overstretching yourself as well as any additional costs associated with remortgaging, such as valuation expenses and legal fees.
It might be best to wait until your current mortgage deal has ended to avoid paying an early repayment charge.
If you are tied into a mortgage deal with an early repayment charge, then you may want to use an additional borrowing product from your existing lender instead. Watch house prices closely – it’s better not to remortgage in this way if your home’s value has just fallen.
You should also keep in mind that if you remortgage to release equity, you may end up paying more interest over the full term of the loan on any additional borrowing than you would if you kept your existing mortgage and an arrangement fee for your new loan.
Selling your home allows you to release significant money from it. Although it means that you would have to leave your property, it also provides you with access to the full market value of your property.
This excludes any outstanding mortgage.
Whilst selling your home is a clear-cut way to release money, it’s worth considering the costs involved. For instance, estate agent fees and removal costs. You will also need to find a new place to live.
If you sell your home and move to a less expensive property, you could have a sizable lump sum in the short term. However, if house prices rise in the future, you might miss out on these gains.
This makes it recommended to seek guidance from a financial adviser before making any big decisions.
An equity release calculator is an online tool designed to give homeowners an estimate of how much cash they could potentially release from the value of their home through an equity release scheme.
The calculator provides an indicative figure of the maximum amount that could be borrowed by inputting details such as the age of the homeowner(s), the property value, and any outstanding mortgage or loans secured against the home.
Try the equity release calculator below to estimate what you can release.
Try Age Partnership’s equity release calculator and estimate how much money you could release from your property.
If you take out a product from Age Partnership, we will receive a fee for introducing you to them. This helps support the site and for us to produce more content.
Equity release offers homeowners over the age of 55 a way to access the wealth tied up in their property. There are two main types of equity release: Lifetime Mortgages and Home Reversion Plans.
Understanding the specifics of each can help homeowners make informed decisions about which option might best suit their needs.
A Lifetime Mortgage is the most popular form of equity release. This type of mortgage does not require monthly repayments. Instead, the interest is rolled up, meaning it is added to the loan amount, and both are repaid when the homeowner dies or moves into long-term care.
There are various types of lifetime mortgages available, including:
By using a fixed repayment lifetime mortgage, you agree upfront how much of your home’s future sale proceeds will go to the lender. The amount you receive is less than the value of the percentage you agree to sell.
An interest payment lifetime mortgage allows you to pay off the interest monthly, thereby maintaining the original loan amount.
A drawdown lifetime mortgage provides a facility from which you can draw funds as needed, with interest only accruing on the amount drawn.
Home Reversion involves selling a part or all of your property to a home reversion provider in exchange for a lump sum or regular payments. You have the right to continue living in the property rent-free until you die or move into long-term care, but you must agree to maintain and insure the home.
Unlike lifetime mortgages, home reversion plans do not involve borrowing money, so there is no interest to pay. However, it means that homeowners will not benefit from any increase in the value of their property for the part that has been sold.
We have set out below some of the factors that you should consider if taking out an equity release product.
One of the most important things for you to consider before offering equity out of your house is how it will impact your inheritance. If you have youngsters or grandchildren, you should consider how they’ll be financially affected if you pass away.
Impact on means-tested benefits – Another thing to remember is that releasing equity from your home could impact your entitlement to means-tested benefits, such as Pension Credit or Housing Benefit. This is because the money you release will be treated as income when your entitlement to benefits is calculated.
If you’re not sure how equity release will affect your benefits, you should consult a properly qualified equity release adviser.
If your property is worth less than the amount you owe on your mortgage, you’re said to be in negative equity. This means that if you were to sell your property, you’d have to pay back more than the property’s sale price, as well as things like solicitor’s fees and removal costs.
If you’re considering equity release, you should speak to a suitably qualified financial adviser before making any decisions. They can advise you on the options available to you.
It’s important to remember that if you choose an interest-only equity release product, the loan plus any of the accrued interest rate will need to be repaid when the plan ends. This could mean that your estate won’t have as much money to leave to your beneficiaries when you die.
If you’re considering interest-only equity release deals, you should ensure that you have a suitable repayment strategy.
This could involve making regular payments into a savings account, which can be used to repay the loan and pay interest when the plan ends.
You should speak to a suitably qualified financial adviser about your options.
As well as the fees associated with equity release, there are other costs that you need to consider. These include:
If you’re considering trying to release equity, your property will need to be valued. This will usually involve paying a valuation fee.
If you choose to go with equity release, you’ll also be required to pay legal fees. These will differ based on the sort of equity release product you pick and the firm you use.
If you have an existing mortgage taken out on your property, you may have to pay early repayment charges if you choose to release equity from your home.
Consult your existing mortgage lender before you decide.
When releasing money from your home or releasing money from your house, it’s essential to weigh the pros and cons. This financial decision can provide a lifeline during retirement or when facing financial hurdles.
However, it’s also important to consider the impact on your property’s value and potential inheritance. Detailed planning and advice are crucial to successfully navigate the complexities of equity release.
Some of the Best Equity Release Interest Rates as of 18 April 2024
The table below shows you some of the best equity release rates for lifetime mortgages from some of the leading equity release providers in the UK.
| Provider Name | Product Name | Interest Rate | Type of product | Offers | ||
|---|---|---|---|---|---|---|
 | Just | Just For You – J1 Green | 5.35% | Fixed | Free Valuation No application fee | |
| Just | Just For You – J2 Green | 5.40% | Fixed | Free Valuation No application fee | |
 | Scottish Widows | FR1 | 5.50% | Fixed | Cashback Free Valuation No application fee | |
| Just | Just For You – J2 | 5.50% | Fixed | Free Valuation No application fee | |
 | Standard Life | Horizon 200 Drawdown | 5.50% | Fixed | Free Valuation | |
| Standard Life | Horizon 200 Drawdown Fee Free | 5.55% | Fixed | Free Valuation No application fee | |
| Scottish Widows | FR2 | 5.57% | Fixed | Cashback Free Valuation No application fee | |
| Standard Life | Horizon 220 Drawdown Fee Free | 5.59% | Fixed | Free Valuation No application fee | |
| Standard Life | Horizon 240 Drawdown | 5.59% | Fixed | Free Valuation | |
 | More 2 Life | Capital Choice Ultra Lite Drawdown 1 | 5.60% | Fixed | Free Valuation No application fee |
The equity release rates have been sourced by UK Care Guide from the Equity Release Supermarket website. These rates may have changed since this table was created and should be taken as indicative only. There may be other providers not listed on this table that could offer better deals. In addition, the providers and products noted may not be right for your particular circumstances. Therefore, they should only be taken as a guide, and we cannot guarantee their current accuracy. Please also note that we do not provide advice on or endorse any particular product listed here. The rate you are offered will depend on your individual circumstances and subject to lender approval. Therefore, we strongly recommend that you speak to an equity release adviser, who will be able to provide you with information on the latest rates that apply to you.
Speak To An Equity Release Specialist Today
Call Boon Brokers on 0333 567 1607 to discuss your equity release requirements and see what deals are available to you.
Equity release is one of several strategies homeowners might consider to access the financial value of their properties. Understanding how it compares to other financial solutions can help in making an informed decision.
Here are a few for you to consider.
Downsizing involves selling your current home and moving to a smaller, less expensive property. This option can provide a lump sum from the sale proceeds, often without the need to repay a loan. However, downsizing can be emotionally and physically challenging, requiring you to leave a familiar home and potentially downscale your lifestyle.
A personal loan can offer a fixed amount of money with a clear repayment plan over a set term, typically at a higher interest rate than a mortgage but without using your home as security. This option is suitable for those who need a smaller amount of cash and are confident in their ability to make regular repayments over the short to medium term.
Remortgaging involves switching your existing mortgage to a new deal, potentially with a different lender. This can be done to release equity, but also to achieve a better interest rate or more favourable terms. Unlike equity release, remortgaging requires you to pass affordability checks and may not be available to older homeowners without a regular income.
Each of these options has its advantages and considerations.
Downsizing offers a fresh start and potentially significant financial freedom but comes with the cost of leaving a beloved home. Personal loans provide flexibility and are unsecured, but the interest rates can be high.
Remortgaging offers potentially lower interest rates and the ability to stay in your home, but it requires meeting lenders’ criteria and may increase your monthly repayments.
Choosing the right option depends on your financial situation, future plans, and personal preferences. It’s advisable to consult with a financial advisor to explore these options thoroughly and make a decision that aligns with your long-term financial goals.
Equity release can significantly impact your future financial planning, particularly regarding inheritance and eligibility for means-tested benefits. It’s crucial to consider these factors before proceeding.
Equity release reduces the value of your estate, which can affect the amount of inheritance you can leave to your beneficiaries. The money you release, plus any interest accrued, will need to be repaid upon the sale of your home, typically after your death or when you move into long-term care. This repayment can significantly reduce the remaining estate value for your heirs.
Releasing equity from your home may affect your eligibility for means-tested benefits.
The additional funds could be considered as part of your capital or income, potentially disqualifying you from receiving certain benefits like Pension Credit or Council Tax Support. It’s essential to assess your current and future eligibility for these benefits before deciding on equity release.
While equity release provides a lump sum or additional income, it’s important to consider your long-term financial security. The decision to release equity should be part of a broader financial plan, considering potential future needs, such as long-term care costs. Equity release may limit your options for funding such expenses in the future.
By carefully considering these aspects, you can make a more informed decision about whether equity release is the right choice for your financial future.
Equity release is a significant financial decision with various misconceptions surrounding it. Addressing these concerns directly can help homeowners make informed choices.
One common concern is that equity release significantly reduces the amount of inheritance left for family members. While it’s true that the amount you owe can grow over time, potentially reducing the value of your estate, many plans come with an inheritance protection guarantee. This allows you to safeguard a portion of your property’s value for your heirs, ensuring that you can still leave behind a legacy.
Another misconception is the fear of owing more than the house is worth, especially if property prices fall. However, all equity release plans approved by the Equity Release Council come with a no negative equity guarantee. This means you will never owe more than the value of your home, protecting you and your family from an upside-down loan.
Some homeowners worry that taking out an equity release plan means they can’t move house in the future. This is not the case. Equity release products are transferable, meaning you can move to a new property subject to the new property meeting the lender’s criteria. This provides flexibility for those who may need or want to relocate.
Addressing these concerns directly clarifies common misconceptions and demonstrates the safeguards in place to protect homeowners and their families. It’s crucial for anyone considering equity release to consult with a financial adviser to understand fully how these products work and the protections offered.
A March 2024 study by the UK Care Guide highlights an increasing trend among retirees considering equity release a viable means to supplement their retirement income.
This survey, involving 1,803 participants aged 55 and above, revealed that 40% contemplate utilising equity release to support their pension. This insight reflects a significant shift towards recognizing the value of home equity in retirement financial planning.
However, the study also revealed concerns over the financial aspects of equity release, with a notable 42% of respondents pinpointing interest rates as a major worry.
Saq Hussain, a financial expert at UK Care Guide, commented on the findings, stating, “The results from our latest survey underscore the critical need for clarity and informed decision-making in retirement planning. Equity release can be a valuable tool for some retirees, but understanding the full scope of its implications is key.” He emphasised the importance of professional advice, with 39% of the study’s respondents expressing a preference for consulting independent financial advisors.
The article, authored by Tom Dunstan and published on FTAdviser.com on the 28th of February, 2024, reports on findings from Canada Life, which show that clearing an existing mortgage is now the leading reason for people opting to take money out of their homes via equity release.
According to the research, 41% of participants identified mortgage clearance as their primary motive, outpacing other reasons like home improvements (28%), taking holidays (20%), covering day-to-day living costs (17%), and consolidating unsecured debts (16%).
The study suggests a nuanced understanding of homeowner priorities, with a noticeable decrease in the use of equity release for mortgage repayments and home enhancements when compared to data from 2022.
Canada Life’s proposition development manager, Sadna Zaman, comments on the diverse reasons homeowners have for choosing equity release, ranging from property upgrades to managing the financial strain caused by the cost-of-living crisis. Zaman highlights the “flexibility and accessibility” offered by equity release schemes, allowing retirees to tailor their economic plans to fit their best and their family’s needs.
Reflecting on the findings, Saq Hussain, Finance Editor at the UK Care Guide, remarked, “The research from Canada Life vividly illustrates a change in how homeowners approach their financial security, emphasising taking away the burden of a mortgage.
As we go through 2024, this trend shows that people have a more prudent financial mindset , prioritising longer term stability in uncertain times.”
Equity release can have legal and tax implications. Although the money you release from your home is tax-free, that income becomes taxable if you choose to invest it and earn interest.
Also, while the ‘no negative equity guarantee’ ensures that you’ll never owe more than your home’s worth, releasing equity can reduce the value of your estate.
If you’re hoping to leave an inheritance, this could be a drawback of releasing equity.
Furthermore, equity release may affect your entitlement to means-tested benefits. If you receive benefits such as pension credit or council tax reduction, you may no longer be eligible for these benefits. This is due to the added income of releasing money from your home.
The process to release money from the house or how to release money from a house involves several considerations, including the market value of your property and your long-term financial planning. This section aims to guide homeowners through the maze of options available for equity release, ensuring they make informed decisions that align with their financial objectives and lifestyle aspirations
If you’re considering equity release, it is important to source professional advice. An adviser can help you to understand the benefits and risks of different equity release products.
They can also help you to consider other options, such as downsizing or using savings.
When seeking advice, ensure that the adviser is qualified and regulated by the Financial Conduct Authority (FCA). They’ll also ideally have a broad market view, meaning they can advise on different products from various equity release lenders.
The UK Care Guide works in partnership with Boon Brokers, one of the UKs leading equity release specialists.
You can contact them on 0333 567 1607 , or use the equity release calculator to estimate how much you can borrow.
Call Boon Brokers on 0333 567 1607 to discuss your equity release requirements.
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All equity release and mortgage advice is provided by Boon Brokers Limited, which is authorised and regulated by the Financial Conduct Authority (FCA). The Financial Services Register number is 973757.
If you take out a product with Boon Brokers, we will receive a fee for introducing you to them. Boon Brokers provides advice for free and without obligation. By contacting Boon Brokers through us, the cost of any equity release product would be the same as if you had contacted them directly.
The fee we receive is used to help keep this site operational and to produce new content.
Think carefully before securing other debts against your home. Your home or property may be repossessed if you do not keep up repayments on your mortgage.
Saq is a financial expert and is responsible for the day-to-day running of the UK Care Guide website. Before taking on the operation of this site, Saq was a Director and the UK Head of DC Pensions, Benefits and Wellbeing at PwC. Saq is also a part of the steering group at the Living Wage Foundation, which has developed the UK’s National Living Pension standard.
Saq has regularly featured in the press, with examples including:
A personal loan is an unsecured form of credit where you borrow a fixed amount from a lender and repay it over a set period, usually with a fixed interest rate. Personal loans can be used for a variety of purposes, including home improvements, car purchases, or paying off other debts.
A retirement interest-only mortgage is a type of home loan which is designed for older borrowers. Unlike conventional mortgages, you only pay the interest amounts each month. The loan is typically repaid when you sell your home, move into long-term care or pass away.
The Equity Release Council is a trade body that represents the equity release sector in the UK. It sets high standards for its members to ensure that consumers are treated fairly, as well as providing a ‘no negative equity guarantee’ .
When seeking advice, look for advisers who hold an equity release qualification. This ensures that they have the necessary knowledge and skills to advise you. They should also be registered with the Financial Conduct Authority (FCA) and preferably a member of the Equity Release Council. This shows that they adhere to a strict code of conduct.
Yes, you can release equity from your home if you have a joint mortgage. However, both parties must meet the eligibility criteria and agree to the terms of the equity release. The amount of equity which you can release may be affected by the age of the youngest homeowner, so make sure to take this into account.
Keep in mind that equity release will impact the inheritance you leave behind. This is because it reduces the shortfall left in your home. Always seek advice from a qualified equity release adviser to understand how it works, as well as the impact it can have on your financial situation and inheritance.
Releasing cash from your home can help you to consolidate debts and potentially reduce your monthly outgoings. This is particularly suited to those who have several debts with high interest rates. However, it’s important to consider the interest rate of the equity release plan, as these tend to be higher than conventional mortgage rates.
A conventional mortgage is a loan secured on your home, making monthly repayments towards the loan amount and the interest. Once all repayments are made, you own your home outright. This is typically over a 25 year term.
A retirement interest-only mortgage, however, is designed for older borrowers. You only pay the interest each month, and the loan is repaid when you sell your home, move into long-term care or pass away. Although this can make monthly repayments more affordable, it is important to remember that the loan amount will remain the same and will need to be repaid in the future.
The majority of lifetime mortgages are portable, allowing you to transfer them to a new property if you move. However, your new home must meet the lender’s property value and suitability requirements. Furthermore, porting the plan may come with further charges.