There are two types of equity release: 

Lifetime mortgages 

Lifetime mortgages are the most common form of equity release. A percentage of your home’s value is released and paid to you by a provider, either in a lump sum or in a series of smaller instalments. You don’t have to pay the loan back until the last surviving borrower dies or goes into long-term care.  

Interest is charged on a lifetime mortgage. This can either be rolled up and added to your end payment, or you can choose to make monthly repayments.  

With a lifetime mortgage, you will still own your home and have the right to live there until the last surviving borrower dies or moves into long-term care. Your estate will also benefit from any increase in your home’s value when it sells (once the loan and interest has been repaid). 

Home reversion plans 

The other form of equity release is a home reversion plan, where you sell a proportion of your property to a provider. It is not a loan, so you don’t have to pay anything back. You can receive the money as a lump sum or in a series of smaller instalments. The provider will not pay the full market price for their share of the property, as it is likely to be a long time before they get the sales proceeds.  

With a home reversion plan, you no longer fully own your home, but you do have the right to stay living there until the last surviving borrower dies or moves into long-term care. When your home is sold, the sales proceeds will be shared proportionally depending on how much the provider owns.