Equity release: the pros and the cons, honestly

The pros

• Tax-free cash without moving. The money is in the house; this gets it out while you stay put.
• No monthly payments unless you choose to make them. Nothing to fail to afford.
• You keep ownership and the right to live there for life.
• The no-negative-equity guarantee. You can never owe more than the home is worth, and the family can never be asked to pay in.
• A fixed rate for life. Whatever happens to interest rates, yours does not move.
• Flexibility has improved enormously: drawdown, penalty-free partial repayments, inheritance protection, downsizing protection, portability.
• It can clear an interest-only mortgage that is coming to the end of its term with no way to repay, which is one of the most common reasons people use it.
• It can help family now, when a deposit is worth more to them than an inheritance in twenty years.

The cons

• The interest rolls up. At 6%, the debt doubles roughly every twelve years. £60,000 becomes £200,000 in twenty years if nothing is paid.
• The inheritance shrinks, possibly to nothing, depending on how long the plan runs and what house prices do.
• It is expensive to get out of. Early repayment charges can be large in the early years, and some are unpredictable.
• Means-tested benefits can be lost if the cash sits in the bank.
• It is dearer than a mortgage you could afford to pay monthly. If you can pass the affordability test, a further advance, remortgage or RIO is nearly always cheaper.
• The maximum is not generous at 55 to 60, and the debt has longest to grow.
• Moving can be complicated if the new home is not one the lender will accept.
• Once done, it shapes everything after: care funding, gifting, the family's plans for the house.

The questions that decide it

1. Could I afford monthly payments, honestly? If yes, look at the cheaper options first.
2. Do I need all the money now, or some of it? If some, drawdown.
3. Would I rather have £X now or leave £3X to the family in twenty years? There is no wrong answer, but it is the real question.
4. Might I move in the next ten years? If so, the early repayment charge and portability terms matter more than the rate.
5. Do I get, or might I get, Pension Credit? If so, a benefits check comes before anything else.
6. Have I told the people who will be affected?
7. Is the money for something that will still feel worth it in ten years?

The free Is Equity Release Right for Me? self-check puts these questions on one printable page.

A note on the numbers. Rates, loan-to-value limits, fees and timescales are typical figures at the time of writing (2026) and vary between lenders and with your age, health and property. This is information, not advice. Equity release must be arranged through an FCA-authorised adviser, who will give you a personalised illustration before you commit to anything.