/ Money

Is equity release worth the gamble?

More grandparents are using equity release to help their family. Yet, is it really that sensible to release money from your home when it can be such an important safety net?

Stories of young people borrowing from ‘the bank of mum and dad’ aren’t new. But a report by equity release specialist Key Retirement Solutions has highlighted a new trend: young people borrowing from their grandparents, who have released equity in their homes to do so.

Home sweet home

Equity release is a way of freeing up the money in your home without having to move.

Last year, 23% of retired homeowners who took out an equity release plan said lending to their loved ones was their motivation. And in the first six months of this year that rose to 31%. Total lending also increased from £385.7m to £446.2m.

Before the recession, the most common reason retired homeowners gave for using equity release was renovating their property, followed by going on holiday. Although home improvements remain the most popular reason (58%), now more homeowners are citing grandchildren’s university fees or helping their children get on the housing ladder.

Does equity release add up?

For many UK retirees, their home is their largest asset – so making practical use of it makes good financial sense. But it’s worth ensuring that your own financial future is secure before lending a slice of it to your family.

Even those who feel they have a comfortable pension may still find themselves needing to pay for care bills in later life – which can run to £50k a year and beyond.

For those who regard their home as a financial backstop, it may make better financial sense to gift it on to their children once they die, rather than removing the safety net before knowing whether they’ll need it.

Given the high charges, high interest rates and inflexible nature of most of the products on the market, equity release is best kept as a last resort. Is it one you’d take advantage of?


Is equity release a good idea?
Well the last paragraph above just about sums it up, “given the high charges, high interest rates and inflexible nature of most of the products on the market, equity release is best kept as a last resort”
If you think about it you’ll realise that the people offering equity release will do so for only one reason, that being to make money. Now the only source of that money is you and your house so you’re certain to come a very poor second in the order of things.
Better to downsize or move to a cheaper house of the same size in another area if you need to realise the cash. A one off cost to settle with estate agents and solicitors but you get the rest, all of it, to do with as you wish, and you still have something to leave to the offspring.

Giving in to the sentimental pressure to remain under the same roof by raising the cash via equity release will result in a very expensive exercise.
It’s your house, your money and your choice by no way will I be entertaining the option.


hi can anyone offer advice. i have a commercial property that is paid off. i want to release some cash from it. i will have tenants renting out the property but im finding it difficult to get any advice from banks as to how I would release some cash. can anyone help? i live in scotland. thanks


Hi Mia

UK wide, Equity release is not applicable to commercial property, it is only available on your primary residence – you have to be living in the property and it cannot be your second home. So if you wanted to release some cash via equity release, you’d have to do it on the property you’re living in. You could also make money from your property by downsizing to a smaller home, or reviewing any savings or investments you have.


We are considering equity release (only a small amount) as my partner has terminal cancer and we would like to do some of the things that we planned on doing when we both retired. We have no other assets that we can use.

Any advise for others would be appreciated

Thank you

Anthony says:
22 February 2016

Can these equity release companys ever fully wipe out the total value of your property due to there high interest rates ? So your left with nothing atall ?

Lesley Nicholson says:
7 May 2016

At 57, I am about to semi retire….take my work pension and move to another job…much lower pay but less pressure and less hours. Although I have costed this up and can mange on the money…that’s it, I will manage. I live in a house which I have no wish to leave. I have no children and, though I’m sure that friends and family would appreciate, as would anyone, inheriting my home, they don’t need it. Do you think equity release is a sensible way of using my assets or not?


Hi Lesley, thanks for your comment. We have some information on equity release here: http://www.which.co.uk/money/retirement/guides/equity-release-explained/equity-release-is-it-right-for-you/

If you’re a Which? member don’t forget that you can get free money guidance from our advisers by calling the Money Helpline on 01992 822484.


I have noticed many more advertisements and promotions of equity release lately and I suppose it is a result of the continually rising property values which the marketers use as an enticement. I see it as a one-way street and wouldn’t recommend anyone to go there even as a last resort – there is usually some alternative, albeit not necessarily a particularly agreeable one but better than losing control of your home.

The cost of care was mentioned in the Intro – running to £50K or more a year, and this is certainly one of the usual selling points. It is inconceivable that residential care or specialist medical support could be funded for more than a few weeks or months from the release of equity in the average home. It worries me that people have realised this so are cashing in their equity anyway and spending it on something else. Common sense tells me that people whose property enables them to exercise equity release also have the alternative option of downsizing or moving to a cheaper property.

Simon Attwater says:
27 January 2017

Can anyone point me in the direction of typical Equity Release or Lifetime Mortgage interest rates? I cannot find any anywhere. They seem to be the best kept secret of any money matter I know.