Frequently asked questions (FAQs)

Equity Release: Frequently Asked Questions (FAQs)
If you’re considering releasing some of the equity tied up in your home, it’s natural to have questions about how it works and what it could mean for your finances and family.

Below, we’ve answered the most common questions — with key risk warnings so you can make an informed decision.

1. Can I release equity from my home?
To be eligible, all applicants must usually be aged 55 or over and own a UK property valued at £70,000 or more.
Each lender has its own criteria — not all property types qualify (for example, homes of non-standard construction, short leases, or retirement-only complexes).
⚠️ Risk warning: Meeting eligibility criteria does not mean equity release is suitable for you. You must receive regulated financial advice before proceeding.

2. Is equity release safe?
Equity release is regulated by the Financial Conduct Authority (FCA), and all plans recommended by Compare Retirement meet the standards of the Equity Release Council (ERC), including:

• The No Negative Equity Guarantee, meaning you’ll never owe more than your home’s value.
• The right to remain in your home for life, or until you move into permanent care.
• The right to move home, subject to lender approval.

⚠️ However: “Safe” doesn’t mean risk-free. Interest compounds over time, reducing the value of your estate and the inheritance you leave behind.

3. Should I involve my family?
Yes. We strongly recommend discussing your plans with your family or beneficiaries.
Equity release can impact their inheritance and family wealth planning. Transparency avoids surprises later.

4. Can I take equity release if I still have a mortgage?
Yes. You can use part of the funds released to repay your existing mortgage, leaving the remainder for your personal use.
⚠️ Your current mortgage must be repaid as part of the process. Equity release cannot run alongside a standard residential mortgage.

5. How much can I release?
This depends on your age, property value, and personal circumstances.
Older applicants can typically release a higher percentage of their home’s value. Enhanced plans may allow more if you have certain health conditions.
Example: A 70-year-old might access 35–40% of their property’s value, while a 55-year-old might access around 20–25%.

6. How long does the process take?
Usually 6 to 10 weeks, depending on valuation, legal work, and lender turnaround times.

7. Who owns my home if I take out equity release?
With a Lifetime Mortgage, you remain the legal owner of your home.
With a Home Reversion Plan, you sell part or all of your property to a provider but retain the right to live there rent-free for life.

8. Can I move home later?
Yes. Most ERC-approved plans are portable, meaning they can be transferred to another suitable property if you decide to move.
⚠️ If your new property doesn’t meet lender criteria, you may need to repay the loan — potentially triggering early repayment charges.

9. Can I stay in my home for life?
Yes. All ERC-approved lifetime mortgages guarantee your right to stay in your home for the rest of your life or until you enter permanent long-term care.

10. Do I have to make monthly repayments?
No. Most plans allow the interest to “roll up,” meaning there are no mandatory monthly payments.
You can, however, choose to make voluntary or partial repayments to reduce future interest costs.
⚠️ Interest compounds over time, meaning the total amount owed can grow quickly.

11. Can I repay my plan early?
Yes. You can usually make partial or full repayments. Some plans include downsizing protection, which waives early repayment charges if you move home after a set period.
⚠️ Early repayment charges may apply in the early years of your plan — your adviser will explain all terms before you proceed.

12. What costs are involved?
We provide free, no-obligation advice. Our fee (typically £1,195) is only payable upon completion.
You may also pay for:

• Valuation or surveyor fees
• Solicitor/conveyancer fees
• Lender arrangement fees

All costs will be clearly explained upfront.

13. Can I protect an inheritance for my family?
Yes. Some lifetime mortgages allow you to protect a percentage of your home’s future value so that it remains part of your estate.

14. Will my family be left in debt?
No. The No Negative Equity Guarantee ensures you’ll never owe more than the value of your home when it’s sold.

15. What happens if I move into long-term care?
If the plan is joint, your partner can stay in the home.
If it’s a single plan, your home will usually be sold to repay the loan, with any surplus going to your estate.

16. What happens when I pass away?
The loan and interest are repaid from the sale of your property.
Any remaining proceeds go to your estate for distribution to your beneficiaries.

17. Will equity release affect my benefits?
Yes, possibly. Equity release can affect entitlement to means-tested benefits, such as:

• Pension Credit
• Council Tax Support
• Universal Credit

Your adviser will assess this before making a recommendation.

18. What happens if property prices fall?
Even if your home’s value falls, you’ll never owe more than its eventual sale value — thanks to the No Negative Equity Guarantee.
However, a fall in property prices reduces any remaining equity and inheritance.

19. Is the money released tax-free?
Yes — equity release funds are tax-free.
However, placing the money in interest-bearing or investment accounts may create future tax liabilities. Seek independent tax advice if unsure.

20. What protections do I have?
All equity release plans arranged by Compare Retirement are:

• Regulated by the Financial Conduct Authority (FCA)
• Compliant with the Equity Release Council’s standards, ensuring responsible lending and strong consumer protection
• Supported by an independent solicitor acting for you, to ensure you understand the contract fully

If you ever have a concern, you can complain via our internal procedure and, if unresolved, to the Financial Ombudsman Service.

21. What happens if I live longer than expected?
You have the right to live in your home for life — regardless of how long you live.
Interest continues to roll up, but the lender cannot repossess your home while you live there in accordance with plan terms.

22. How can I ensure equity release is right for me?
Equity release is not suitable for everyone.
Before recommending a plan, your adviser will:

• Explore all alternatives (moving house or downsizing, using other funds, existing assets or savings, help from family members, taking in a lodger, conventional or retirement interest-only mortgage, other borrowing or personal loan).
• Assess your income, health, family situation, and long-term goals
• Provide a personal suitability report and Key Facts Illustration (KFI) so you can make an informed decision.

Important Risk Warnings & Legal Notices
⚠️ Equity release is a long-term commitment. It will reduce the value of your estate and may affect your entitlement to means-tested benefits.
⚠️ Always seek specialist regulated advice before proceeding. You cannot take out an equity release plan without first receiving advice from an authorised adviser.
⚠️ The information on this page is for general guidance only and does not constitute financial advice. All figures and examples are for illustrative purposes.
⚠️ Interest rolls up over time, which can substantially increase the amount owed. Your adviser will explain how interest compounds and what the impact could be on your inheritance.
⚠️ Early repayment charges may apply if you repay your plan before a certain period.
⚠️ Consumer Duty Notice: Compare Retirement is committed to ensuring that all communications are clear, fair and not misleading, and that clients understand the benefits, costs, and risks of any product before proceeding.