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Equity Release Glossary
BankingTimes’ Equity Release Glossary is created by a team of UK personal finance experts and reviewed by FCA-authorised advisers to ensure accuracy, clarity, and impartiality.
This page is regularly reviewed for accuracy.
Last Reviewed: 16 Jul 2025
What is Equity Release?
Equity release allows UK homeowners aged 55+ to access part of their property’s value as tax-free cash, while continuing to live in their home.
The main types are lifetime mortgages and home reversion plans, both of which are regulated financial products.
Equity release is a long-term commitment that will reduce the value of your estate and may affect your entitlement to means-tested benefits.
You must receive advice from a qualified, FCA-regulated adviser before taking out any equity release product. Options depend on your personal circumstances, property value, and lender criteria.
Key Features
Stay in Your Home: You can usually continue living in your property while accessing some of its value.
No Monthly Repayments: Most plans don’t require monthly repayments. The loan plus interest is typically repaid when the property is sold (for example, when you move into long-term care or pass away).
Flexible Loan Options: Choose between a lifetime mortgage or a home reversion plan, depending on your needs and eligibility.
Tax-Free Cash: The funds you release are tax-free; however, how you use them may affect your benefits or tax position.
Common Terms Used in Equity Release
Understanding the key terms associated with equity release is essential for making informed decisions. Below, we’ve broken down some of the most common terms you’ll encounter, grouped into core equity release concepts and financial or regulatory terms.
Core Equity Release Terms
Lifetime Mortgage – A loan secured on your home, repaid when you die or move into care; no monthly repayments.
Home Reversion Plan – Sell all or part of your home for a cash lump sum or regular income, while retaining the right to stay in it rent-free.
Loan-to-Value (LTV) – The proportion of your home’s value you can borrow (e.g., 30% LTV on a £100,000 property means a £30,000 loan).
Interest Roll-up – Unpaid interest is added to your balance (interest-on-interest), compounding until repayment.
Early Repayment Charge (ERC) – A fee for repaying your plan early; defined, variable, or waived depending on your contract.
No Negative Equity Guarantee (NNEG) – Ensures you (or your estate) never repay more than the value your home sells for.
Financial & Regulatory Terms
APR (Annual Percentage Rate) – The total yearly cost of borrowing, including both interest and fees.
Tax-Free Cash – Money released is not taxable, though how the funds are used could have wider implications.
Repayment Options – Ways to repay the loan, including regular interest, partial, or full repayment when the property is sold.
Equity Release Council (ERC) – Industry body setting strict standards and consumer protections for plans and advice.
Financial Conduct Authority (FCA) – Regulates equity release providers and advisers to ensure compliance with legal and ethical standards.
Inheritance Protection – Some plans let you reserve (ring-fence) a portion of your property’s value for your heirs.
Understanding Your Options
When exploring equity release, it’s essential to understand both the benefits and risks before proceeding.
Impact on Your Estate
Equity release will reduce the value of your estate and could affect your entitlement to means-tested benefits.
Eligibility Criteria
Includes your age, property type and value, existing mortgage, and sometimes your health or lifestyle.
Repayment Terms
Most plans are repaid when your property is sold. Early repayment charges may apply.
Tax Implications
Releasing equity may affect your benefits and inheritance. Speak with a specialist before proceeding.
Access to Funds
How equity release provides cash, either as a lump sum, regular payments, or a combination.
Professional Advice
The importance of consulting a financial advisor to ensure equity release suits your financial situation.
Frequently Asked Questions
Here are some of the most common questions about equity release. If you don’t find the answer you’re looking for, feel free to reach out to us.
What Is the Minimum Age for Equity Release?
55 for most lifetime mortgages; 65+ for home reversion plans.
Can Equity Release Affect My Inheritance or Benefits?
Yes. It may reduce what you leave behind and could affect means-tested benefits. Inheritance protection features are available—seek specialist advice.
How Much Can I Release from My Property?
The amount you can release depends on factors like your age, property value, and lender terms, typically ranging from 20% to 60% of your home’s value.
Is Equity Release Taxable?
The money you release is tax-free, but it may affect your entitlement to certain benefits.
What Happens If I Need to Move?
If you need to move to a new home, your equity release agreement can usually be transferred, though this may depend on the terms of your plan.
What Happens If I Live Longer Than Expected?
With most equity release plans, you can stay in your home for as long as you live, even if the loan balance grows over time.
Additional Resources
To help you make an informed decision, we’ve compiled a list of helpful resources that dive deeper into equity release, its benefits, and its potential risks. Feel free to explore the articles and tools below.
Contact Us
If you have any questions, our friendly team can connect you with an FCA-regulated equity release or pension adviser for free initial guidance. BankingTimes itself does not offer financial advice.
Contact UsImportant Note
BankingTimes is not FCA-authorised and does not provide financial advice. We act as an introducer to qualified advisers, including Age Partnership Limited (FCA FRN 425432). Equity release reduces the value of your estate and may affect eligibility for benefits, always seek guidance from an FCA-authorised adviser.
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