Types of
Equity Release
Understand the different ways to release equity from your home. Our comprehensive guide explains lifetime mortgages and home reversion plans.
Lifetime Mortgage
95%+ of the market
A loan secured against your home. You retain ownership and can stay for life.
Home Reversion
Less than 5% of market
Sell all or part of your home in exchange for a lump sum and rent-free occupancy.
Lifetime Mortgage Options
The most popular form of equity release. Choose from several sub-types to match your needs.
Roll-Up Lifetime Mortgage
The most common type. Interest is added to the loan each month and compounds over time. No monthly payments required.
Advantages
- No monthly payments
- Flexible use of funds
- Stay in your home for life
Considerations
- Interest compounds quickly
- Reduces inheritance
- Higher total cost over time
Interest-Only Lifetime Mortgage
You make monthly interest payments to prevent the loan balance growing. The original loan is repaid when the property is sold.
Advantages
- Loan balance stays the same
- More inheritance preserved
- Lower total cost
Considerations
- Monthly payments required
- Must prove affordability
- Payments could become difficult
Drawdown Lifetime Mortgage
Access a cash reserve over time rather than taking everything upfront. Interest only charged on what you've withdrawn.
Advantages
- Reduces interest costs
- Flexible access to funds
- Can preserve more equity
Considerations
- Reserve not guaranteed
- May not access full amount
- Requires financial planning
Enhanced Lifetime Mortgage
Higher release amounts available if you have certain health conditions or lifestyle factors like smoking.
Advantages
- Up to 15% more funds
- Same protections apply
- Recognises reduced life expectancy
Considerations
- Medical evidence required
- Not available to everyone
- Conditions vary by lender
Which Lifetime Mortgage is Right for You?
- Roll-up: Best if you want maximum flexibility and no monthly payments
- Interest-only: Best if you can afford payments and want to protect inheritance
- Drawdown: Best if you need funds gradually rather than all at once
- Enhanced: Best if you have health conditions that qualify for better rates
Side-by-Side Comparison
Compare the key differences between lifetime mortgages and home reversion plans
| Feature | Lifetime Mortgage | Home Reversion |
|---|---|---|
| Ownership | You retain full ownership | You sell part or all ownership |
| How it works | A loan secured against your home | Sale of your property or share of it |
| Monthly payments | Optional (usually none required) | None - you live rent-free |
| Interest | Yes - typically compounds | No interest charges |
| Amount received | 20-57% of property value | 30-60% of share sold |
| House price benefit | You benefit from 100% | Only on share you retain |
| Minimum age | Usually 55+ | Usually 65+ |
| Availability | Widely available | Very limited options |
| Popularity | 95%+ of equity release market | Less than 5% of market |