COUNCIL of MORTGAGE
LENDERS
Equity release guide – unlocking the value of your home
What is equity release?
How can I release the equity in my property?
What will it cost?
Lifetime mortgages
Home reversion schemes
The costs of entering into an equity release scheme
Important issues for you to consider
Frequently asked questions
What is equity release?
Equity is the difference between any mortgage you may have and the value of your home. Equity
release is a way of unlocking the value of your property, without having to move home. It is used
mostly by older homeowners who either have paid off their mortgage altogether or have only a small
amount left to pay.
You can release the value of your home to give yourself a lump sum or a regular income (or both). If
you live in the property until you die, the money from its sale is used to pay the lender before anything
left over is paid to your beneficiaries. If you sell the property before you die, you repay the money you
borrowed from the lender. With some types of loan you might also have to make regular interest
payments.
Here is some basic information about equity release which tries to answer some of the questions you
should ask yourself and your advisers if you are considering this option. If you are considering equity
release you should also get expert financial and legal advice. Equity release can also affect the
amount you are able to leave to your family or other beneficiaries after you die, so you may also want
to talk through your plans with them.
How can I release the equity in my property?
There are two main ways you can do this.
• Taking out a mortgage
There are special types of loans, usually designed to run for the rest of your life, called
lifetime mortgages. You borrow money secured against the value of your home to give you
a lump sum or a regular income. You continue to own your home. The loan is repaid to the
lender when your property is sold.
• Selling your home (or part of it)
T