Can you borrow against your home in retirement

Turning home value into retirement cash

Many UK homeowners reach their late 50s or 60s with rising living costs and most of their wealth tied up in bricks and mortar. In 2025, more retirees are unlocking that property wealth to improve their homes, clear lingering mortgages, or top up day-to-day income. Q1 data shows 39% used equity release for home improvements and 31% to repay existing mortgages, reflecting a shift toward using property as a practical financial resource in later life. For many, it is about maintaining independence and quality of life rather than chasing luxuries.

Equity release is not a one-size tool. Lump sums suit homeowners tackling big-ticket needs like mortgage clearance or major renovations. Draw-down facilities spread access over time, which can help manage interest and offer budgeting flexibility. The market has proven resilient in 2025, with lifetime mortgage lending reaching £1.1 billion in Q2 despite higher rates, underlining steady demand and persistent interest from older homeowners. The ageing UK population adds momentum, with around a quarter expected to be 65 or older by 2050, expanding the pool of potential applicants.

Understanding APR is not just about percentages - it is about knowing what you will pay in real terms. That is why clarity on fees, compounding interest, and early repayment charges matters. The right product can support ageing in place by funding adaptations like wet rooms, ramps, or stairlifts that keep you safe and independent. For some, it also opens the door to supporting family members through gifts, such as deposits for a first home, aligning financial choices with personal values.

Equity release has weighty implications. It will likely reduce your estate, may affect means-tested benefits, and can be expensive if interest rolls up for many years. A no-negative-equity guarantee protects against owing more than your home is worth, but it does not remove the need for careful planning. The key is to approach it like any serious financial decision: define your goals, understand the mechanics, compare options, and seek regulated advice before you commit.

Equity release can turn housing wealth into practical freedom - but only when the costs, safeguards, and long-term trade-offs are crystal clear.

Who should consider this route

If you are 55 or over, own your main residence in the UK, and need tax-free cash without moving house, equity release may be worth exploring. It is particularly relevant if you want to pay off an existing mortgage that is straining your budget, or to fund home improvements that allow you to stay put comfortably for longer. Draw-down options suit those looking to supplement pension income in a controlled way, helping navigate inflation without taking more than needed at once.

It can also fit families who prefer giving while living, using property wealth to help children or grandchildren onto the housing ladder. That said, it is not ideal for those planning to downsize soon, or for anyone who can meet goals more cheaply with conventional borrowing or by adjusting spending. The decision turns on your time horizon, health, inheritance plans, and how you weigh flexibility against the certainty of staying in the home you love.

Jargon made simple

• Lifetime mortgage: A loan secured on your home, usually with rolled-up interest, repaid when you die or enter long-term care.

• Draw-down facility: An agreed cash reserve you can access in stages, paying interest only on funds you actually take.

• Lump sum plan: A one-off release of cash, often used for mortgage repayment or major works.

• Home reversion: You sell a share of your home to a provider in return for tax-free cash and a lifetime lease.

• No-negative-equity guarantee: You will never owe more than your home’s sale proceeds, provided you meet the plan’s terms.

• Early repayment charge: A fee if you repay some or all of the loan before certain dates.

• Loan-to-value (LTV): The percentage of your property value you can borrow, usually higher at older ages.

Ways to access your home’s value

1. Lifetime mortgage - lump sum

   • Receive a single tax-free amount. Useful for clearing an existing mortgage or funding a substantial renovation. Interest typically compounds, increasing the balance over time. Some plans include partial repayment features to manage growth.

2. Lifetime mortgage - draw-down

   • Set up a facility and withdraw as needed. You pay interest only on amounts drawn, which can reduce total interest versus a lump sum. Often used to supplement income, reflecting 2025’s trend toward steady top-ups rather than one-off spending.

3. Enhanced lifetime mortgage

   • May offer a higher LTV or lower rate if you have certain health or lifestyle factors. Can help release more for care adaptations or medical needs while staying at home.

4. Interest-only lifetime mortgage

   • You pay monthly interest to keep the balance level, with the capital repaid from the home sale later. Suitable for those with reliable income who want to limit roll-up.

5. Home reversion plan

   • You sell a portion of the property to a provider in exchange for cash and a lifetime lease. You no longer fully own that portion, so inheritance is reduced, but there is no interest to roll up.

What it could cost and what it means

Do you meet the usual criteria

In the UK, eligibility generally starts at age 55 and requires that the property is your main residence, typically worth at least £70,000. You must own it outright or be able to clear any remaining mortgage as part of the transaction. Minimum releases often start from £10,000, though the amount you can access depends on age, property value, and lender criteria. Older applicants usually qualify for higher loan-to-value percentages.

Lenders will consider construction type, location, and condition. They may require that any leasehold has sufficient years remaining, and flats or non-standard construction could face tighter limits. Providers also look at your future plans, because early repayment or moving home can trigger charges unless the plan allows porting. If you are receiving means-tested benefits, advice should cover how a lump sum or draw-down could alter your entitlement. Finally, choosing a provider that follows Equity Release Council standards adds important consumer safeguards, including a no-negative-equity guarantee and the right to remain in your home for life, subject to terms.

Step-by-step from enquiry to funds

1. Define your goal and budget needs clearly.

2. Check eligibility and property value estimate.

3. Speak to a qualified equity release adviser.

4. Compare plans, rates, fees, and protections.

5. Complete a personalised affordability and risk review.

6. Formal property valuation and legal instructions.

7. Receive offer, complete legal checks, then sign.

8. Funds released to your account or solicitor.

Advantages and drawbacks at a glance

What to think about before you sign

Equity release should align with a clear plan for your later-life finances. If your priority is independence, using funds for home improvements can be powerful. If you need budget relief, clearing a mortgage can lower monthly stress. Draw-down can help manage inflation while limiting interest accrual. Yet every benefit has a trade-off. Interest compounds, estates shrink, and benefits can be affected. Consider your health, life expectancy, and the likelihood of moving. Pay attention to early repayment terms, inheritance protection features, and whether the plan is portable. Seek advice from a regulated specialist who can model scenarios and show how different product features behave over time.

Alternatives worth weighing

1. Downsize to release capital with lower running costs.

2. Use unsecured credit or a retirement interest-only mortgage if suitable.

3. Tap savings or ISAs before taking large lump sums.

4. Adjust spending or explore benefits entitlements you may be missing.

5. Family support agreements, including intra-family loans with legal documentation.

Frequently asked questions

Q: Is the cash from equity release tax-free? A: Yes, the funds are tax-free. Tax may apply if you invest the money and generate income or gains. Seek tax advice for your circumstances.

Q: How do interest rates affect me? A: Higher fixed rates increase how quickly the balance grows. Draw-down helps by charging interest only on amounts you actually take. Compare fixed-rate guarantees and repayment options.

Q: Will it affect my benefits? A: It can. Lump sums and higher savings can reduce means-tested benefits. An adviser should assess the impact before you proceed.

Q: Can I move house later? A: Many plans are portable, subject to the new property meeting lender criteria. Early repayment charges can still apply, so check the specifics.

Q: What if property values fall? A: Equity Release Council standards include a no-negative-equity guarantee, so you will not owe more than the sale proceeds if terms are met, but falling values may reduce inheritance.

Q: Who typically uses equity release? A: In 2025, many customers used it for home improvements, mortgage clearance, and income top-ups, reflecting the trend toward practical, independence-focused outcomes.

What to do next

List your objectives, timeline, and budget. Gather details of your property, mortgage balance, income, and benefits. Speak with a regulated adviser who can compare lifetime mortgages and home reversion, model roll-up, and assess portability and charges. Ask for written illustrations and a clear explanation of risks and protections before committing.

Important information

Equity release is a long-term commitment secured against your home. It may affect your entitlement to state benefits and will reduce the value of your estate. Always seek personalised, regulated advice and consider alternatives before proceeding.