Equity release works by allowing homeowners aged 55+ to access the value tied up in their property while continuing to live there. There are two main types:

1. Lifetime Mortgage: You borrow a percentage of your home's value. The loan plus interest is repaid when you die or move into long-term care.
2. Home Reversion: You sell part or all of your home to a provider in exchange for a lump sum or regular payments, while retaining the right to live there rent-free.

Both options provide tax-free cash that can be used for any purpose, such as supplementing your retirement income, home improvements, or helping family members.

Yes, you can use equity release to pay off existing debts, including mortgages, loans, or credit cards. Many people use equity release specifically to clear an existing mortgage or other debts to reduce their monthly outgoings during retirement.

However, it's important to consider the long-term costs carefully. While equity release can eliminate monthly debt payments now, the interest that accumulates over time may result in a larger total repayment from your estate compared to managing the debt through other means.

Yes, some homeowners use equity release to fund the purchase of a second property or holiday home. The tax-free cash released from your main residence can be used for any purpose, including as a deposit or full payment for another property.

However, this approach requires careful financial planning. You should consider how the accumulating interest on the equity release loan might affect your estate and any inheritance you wish to leave. Additionally, owning multiple properties may have tax implications that should be discussed with a financial adviser.

Interest rates for equity release products (specifically lifetime mortgages) typically range from 5% to 7% in 2024/2025. These rates are usually fixed for the life of the loan, providing certainty about future costs.

It's important to note that equity release interest rates are generally higher than standard mortgage rates. The interest compounds over time (is added to the loan), which means the debt can grow significantly over the years. Many modern equity release products offer options to make voluntary repayments to manage this growth.

The amount you can release typically ranges from 20% to 60% of your property's value, depending on:

• Your age: Older applicants can usually release more
• Property value: Higher-valued properties may qualify for better terms
• Health and lifestyle: Some providers offer enhanced terms for certain medical conditions
• Outstanding mortgage: Any existing mortgage must be paid off from the released equity

Use our calculator above for an estimate based on your specific circumstances, or speak with one of our advisers for a personalised assessment.

Equity release can affect your tax position and eligibility for means-tested benefits in several ways:

• The released cash could affect your eligibility for means-tested benefits like Pension Credit, Council Tax Reduction, or Universal Credit
• While the released money itself is tax-free, if you invest it, the returns may be subject to tax
• Having more savings from equity release could push you into a higher tax bracket if the interest earned exceeds your Personal Savings Allowance

It's advisable to consult with a benefits specialist or financial adviser before proceeding with equity release if you're receiving means-tested benefits or are concerned about tax implications.