Your home is likely to be one of the largest assets you hold. Yet, as you can’t usually access the wealth tied to property, you might overlook it when making financial decisions.
According to Lloyds Bank (7 August 2026), in July 2026, the price of the average home was just below £300,000. So, when you’re reviewing your assets, your home could be a significant source of wealth.
Of course, accessing property wealth isn’t as simple as withdrawing money from a bank account. You could sell your home and purchase a cheaper property to release some of the equity. However, you might not want to move to a new property.
An alternative option is to use equity release. The most common form of equity release is a lifetime mortgage.
Through a lifetime mortgage, you take equity out of your home. Instead of making repayments on a lifetime mortgage, the debt, along with any accrued interest, is repaid when you pass away or move into long-term care, allowing you to continue living in your home. You usually need to be aged 55 or older to use equity release.
Data from the Equity Release Council (3 August 2026) shows homeowners used equity release to access £597 million between April and June 2026.
Why are homeowners increasingly using equity release?
To fund home improvements
The most common reason people use equity release is to fund home adaptations or improvements, according to Canada Life (20 July 2026). 43% of people using equity release intended to use at least a portion of the money for this purpose.
It could give you a way to take on a large renovation project or make small changes to your home that make it more comfortable in your later years.
To clear an existing mortgage
You don’t need to be mortgage-free to use equity release. However, if you have a mortgage, you will need to use the money released from your property to clear the mortgage balance.
Clearing your mortgage could give you greater financial flexibility and increase your disposable income, as it’ll remove one of your regular outgoings.
To support retirement
Releasing equity from your home could give you more flexibility when planning for retirement. Depending on your circumstances, it might enable you to retire sooner, kickstart the next chapter of your life by travelling, or simply increase your income over the long term.
To pass on wealth to loved ones
Rather than leaving property wealth for your loved ones to inherit after you’re gone, equity release could provide a way to offer support now.
If your intended beneficiaries are struggling financially, a gift during your lifetime could have a greater impact than an inheritance. It may help them get on the property ladder, pay for further education, or tick off other life goals. According to Canada Life, 15% of people using equity release plan to gift some of the money.
To reduce a potential Inheritance Tax bill
Some families may use equity release as part of a wider Inheritance Tax (IHT) strategy.
IHT is a tax your estate might pay when you die. In 2026/27, the nil-rate band is £325,000. If the total value of your estate is below this threshold, no IHT will be due. If you leave your main home to direct descendants, you may also benefit from the residence nil-rate band, which is up to £175,000 in 2026/27.
Unused portions of IHT allowances may be transferable to your surviving spouse or civil partner. So, as a couple, you could pass on up to £1 million before IHT is due.
Using money accessed through equity release during your lifetime could reduce a potential IHT bill, although the impact will depend on your individual circumstances. While estate planning might seem like something you could delay, we previously explained why this could potentially lead to higher IHT bills.
The drawbacks of using equity release
While equity release could provide a way to access property wealth, there may be some significant drawbacks that are important to weigh up.
- Many people using equity release choose not to make regular repayments. As interest is accrued, the balance owed when you pass away may be substantially more than the amount you initially borrowed and could reduce what your loved ones inherit. As a result, equity release will reduce the value of your estate.
- The loan will usually need to be repaid from the proceeds of selling the property or other available funds. As a result, your loved ones may not inherit your home.
- Usually, you will not be able to secure other debts against your property, which could limit your options if you want to borrow money.
- Borrowing against your home could make it difficult to move in the future.
- Equity release could affect your eligibility for means-tested benefits.
A lifetime mortgage is a loan secured against your home. To understand the features and risks, ask for a personalised illustration.
If you’d like to talk about whether equity release could be right for you and understand the potential implications, please get in touch.
Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
The Financial Conduct Authority does not regulate estate planning or tax planning.
