What is Equity Release > What Can You Use Equity Release Money For?

What can you use equity release money for?

Read our guide to the reasons for equity release – what will you do with the tax-free cash you release?

With equity release, you choose how to spend your money

Thousands of UK homeowners aged 55+ unlock tax-free cash from their property each year with equity release. You can use the money for just about any legal purpose. Once you have paid off any existing mortgage or secured debts you are free to choose from all kinds of ways to use your money.

If you need a cash lump-sum or a boost to your regular income, our guide to the most popular reasons for equity release may help you decide if it’s right for you. You can also get professional advice on your options through Equity Release Wise: call us on 0808 178 3055 or request a call back and we can arrange a no-obligation appointment with one of our selected equity release advisers.

Using equity release to pay off a mortgage

The prospect of retiring on a lower income while still making mortgage payments will be worrying for many people. So it’s not surprising that it’s so common to use equity release to pay off a mortgage.

If you wish to clear the balance on a repayment mortgage, the answer may be equity release. To pay off a mortgage, the first part of your cash release will go to your existing lender and the rest is for you to use as you wish.

People are also using equity release to pay off interest-only mortgages. If you don’t have savings or investments to pay off the capital from your interest-only mortgage, you may be able to use an equity release lifetime mortgage to do that.

You can continue to live in and enjoy your home without the burden of monthly payments. With a lifetime mortgage (the most popular form of equity release), only when you pass away or move into long-term care will the loan and interest have to be paid back through the sale of your home.

Clear other debts and outgoings

Sometimes even the most financially-aware of us find that we are dealing with debt, large bills or regular outgoings such as car payments. The burden and stress of money worries as we get older can start to be a real concern.

Retirement in particular is a time when most of us see our income drop, so being in debt or struggling to keep up with payments can cause real financial worry or hardship. It’s no wonder therefore that ‘Can I release equity to pay off debt?’ is a question we often hear at Equity Release Wise.

Equity release can offer an alternative to the stress of loans, credit cards debts, overdrafts, store cards, tax bills, solicitor fees, CCJs, IVAs and so on.

You may be able to release a single lump sum from your property wealth to clear your debts outright. Alternatively, you could make withdrawals in instalments to manage ongoing repayments of debts or other financial commitments.


Debts and expenses that may be cleared through equity release
  • Credit cards
  • Loans
  • Overdraft
  • Car payments
  • Tax bills
  • IVAs
  • CCJs
  • Bankruptcy

Supplement your regular income

It’s an unfortunate fact of life that your state pension, private pension, savings and investments may not be enough to fund the lifestyle you want. If you have wealth tied up in your home but insufficient income for your lifestyle, a drawdown lifetime mortgage could be the answer.

With a drawdown plan, you can take an initial payment followed by future smaller releases. Some lenders tended to have a minimum amount per release in the region of £2,000. But more recently, plans became available that let you set up an income from as little as £200 per month.

As well as bringing you income in stages rather than a one-off sum, drawdown typically ends up costing less than a lump sum plan. You only start paying interest when you make each withdrawal, so interest doesn’t mount up as quickly as with a lump sum lifetime mortgage.

Check your eligibility

Call us on 0808 178 3055 and we’ll arrange a free, no-obligation appointment and lifetime mortgage advice* from a specialist who will confirm whether you are eligible. If you’re unable to talk now, request a call back and we’ll call when it’s convenient for you.

Check my eligibility

Equity release for home improvements

As we move towards and into retirement, we tend to find that we have more time to enjoy our home. It’s not surprising that many people at this time turn to equity release for home improvements to be more comfortable.

Maybe you need to make a number of repairs, fit new windows or doors, or upgrade your heating system. Or perhaps you wish to finally get that new kitchen, bathroom or conservatory you’ve been promising yourself.

You may even wish to use equity release for an extension. With hopefully many years to look forward to in your home, now could be the time to make it happen.

Other modifications as your needs change may be necessary, such as a wet room instead of a bath, an ensuite bathroom or adding a bathroom to every floor. Garden improvement is also a reason some people choose equity release, such as to do some landscaping or install a summer house.

Plan review icon

Already have a lifetime mortgage? You could switch for a better deal

Now could be a good time to switch to a different lifetime mortgage. You may be able to release more tax-free cash due to being older than when you took out your existing plan. An increase in your property’s value or being in poorer health could also qualify you for further cash. Interest rate changes may also save thousands over the lifetime of your plan.

Why not arrange a free review* to find out if switching works for you?

Can I move house with equity release?

It can be hard to get a regular mortgage in later life, so an equity release lifetime mortgage can be a welcome alternative if you want to move. This option was reported on by the respected industry website FT Adviser, where they described it as a ‘viable option’ for purchasing a property.

It’s also worth mentioning that customers with existing equity release plans ask us ‘Can you move house if you have equity release?’. This option is built into most lifetime mortgage products. In fact, one of the Equity Release Council’s product standards is to ensure your right to move home if you wish, with no penalty for doing so. There will be conditions of course, including the need for your new property to meet your equity release provider’s lending criteria.

It’s always important to get professional financial advice when considering equity release, and this includes help to understand your options for moving home. You can get advice on this through Equity Release Wise: call us on 0808 178 3055 or request a call back and we can arrange a no-obligation appointment with one of our selected equity release advisers.

Buy a second home or buy-to-let property

People are using equity release to buy a second home to enjoy in their later life or retirement. Likewise, equity release can also help you get into the buy-to-let industry to boost your monthly income.

If you would love a second home or a buy-to-let but lack all the funds to make it happen, equity release could help you make it a reality. The money you receive from an ‘equity release for second home’ plan taken out on your main residence could potentially be used to put a deposit down, or even buy a property outright.

This may seem complicated, but the good news is that our selected advisers are experienced in second home equity release and buy-to-let equity release. Call us on 0808 178 3055 or request a call back and we can arrange an appointment with one of our selected equity release advisers.

Helping loved ones to buy a home

Saving up enough money to pay a deposit has become difficult or out of reach for millions of first time buyers. That’s why more and more people are looking to family for help. In fact, Equity Release Council research found that 43% of mortgaged homeowners under the age of 40 relied on financial help from family or friends to buy their first home.

Maybe you are frustrated to be sitting on property wealth while your children, grandchildren or other family members are struggling to get on the property ladder. If that’s the case, why not look at the option of using equity release to help them?

Pay medical or care bills

Being able to pay for private care may let you stay in your home without having to go into residential care. Home care (also known as domiciliary care) can include everything from a weekly cleaner to daily visits to help with preparing meals or personal care tasks.

An equity release plan could be one way to fund home care, medical bills or adaptations to your home to make life more comfortable. It could help you stay in your home for longer, maintain your independence, and may cost less than going into a care home.

Buy a new car

A reliable car is a ‘must have’ for many people in later life. Being able to get around in safety and comfort can be a big part of enjoying an independent and sociable retirement.

Maybe your existing car is reaching the end of its useful life. Or perhaps with the ups and downs of fuel prices you want a more efficient car, or even an electric car to say goodbye to petrol or diesel costs forever. This is another time when equity release might help.

Enjoy a super holiday

You’ve worked hard all your life and deserve to do things you enjoy or have always dreamt of doing. That could include regular holidays, or maybe a one-off trip of a lifetime, perhaps to visit family or friends overseas.

Another popular option is to release wealth from your home through equity release to buy a caravan, motor home or camper van. It’s a way to make it easier and cheaper to see more of the UK or even nip across the Channel and tour Europe with no hotel costs to worry about.

Inheritance tax planning

Gifting money to your loved ones now rather than leaving it in your will can be a way to reduce or avoid leaving them with a hefty inheritance tax bill. One way it can do this is by reducing the amount of taxable property wealth in your estate through equity release. Another is by releasing equity and leaving money in your pension pot, which does not form part of your taxable estate.

As with most matters regarding pensions and inheritance tax, you should seek professional specialist advice before making any decisions. Our selected equity release advisers will be happy to liaise with your own advisers to help establish whether equity release is suitable for you and your loved ones. Call us on 0808 178 3055 or request a call back and we can arrange an appointment with one of our selected equity release advisers.

Did you know?

The burden of mortgage repayments in retirement is faced by thousands of people. Research in December 2021 found that nearly one-in-three (32%) of mortgaged homeowners are unsure if they will be mortgage-free before they retire, or have already ruled out being able to achieve that.

How can we help?

To find out more about equity release or arrange a consultation with an adviser, please call or request a call back and we’ll be happy to help further.

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Answering your questions

Still unsure of a few things? We’ve got you covered with answers to some of our most frequently asked questions.

  • Can I release equity to pay off debt?

      Many people have retired or are approaching retirement with unpaid debts. With income often dropping in retirement, servicing these debts can become especially difficult. This is why equity release is often chosen as a way to break free of the burden of regular repayments on debt. Debts that have been cleared this way include mortgages, credit cards, loans and overdrafts.

  • Can I move house with equity release?

      Yes you can, and in fact one of the Equity Release Council’s product standards is that anyone taking out an equity release plan has the right to move home if they wish, with no penalty for doing so. There will be conditions of course, including the need for your new property to meet your equity release provider’s lending criteria.

  • What costs are involved with a lifetime mortgage?

      Just as with a normal residential mortgage, you should be aware of costs involved in setting up an equity release lifetime mortgage. Your adviser will make sure you understand these in full before you decide whether to take out a plan, but below is a summary.

      Your lender will typically charge valuation, arrangement and completion fees, with further fees payable to the solicitor who acts for you. Some of these fees can be paid from the money you borrow, so you may not have to worry about finding them from your existing savings.

      Our selected advisers naturally charge an advice fee – but remember that any initial advice or information you receive from them is completely free and without obligation. You only pay them a fee if you apply AND your case completes.

      Once a plan is taken out, there aren’t normally any fees. One exception is an early repayment charge that some lenders request if some or all of your lifetime mortgage is paid off before you pass away or move into long-term care.

  • What are the potential risks of a lifetime mortgage?

      What are the potential risks of a lifetime mortgage?

      A lifetime mortgage has worked for thousands of over 55s in need of tax-free cash. But it’s important to understand some potential risks before deciding if it’s right for you: 

      • Lifetime mortgage interest rates are calculated daily and the interest is added to the amount you owe each month. The amount owed therefore increases and reduces any equity left in your home when the plan ends, unless you choose to make interest payments while the plan is running.
      • Taking equity out of your home will mean that the inheritance you leave to loved ones will reduce. Each time you take money from the plan, the level of possible inheritance will reduce. 
      • If you give some of the money you release to family as a gift, they may be liable to pay inheritance tax in the future.
      • You may have to pay an early repayment charge if you choose to pay back some of the loan early.
      • Borrowing money and building up your savings through a lifetime mortgage may affect your entitlement to some means-tested state benefits. During your appointment with one of our selected equity release advisers, they will help you establish whether your benefits could be affected.

      Equity Release Wise can connect you with a highly trained and knowledgeable adviser who will take the time to explain everything to you, so you can be absolutely sure about your decision.

  • Can I use a lifetime mortgage to buy a house?

      People use a lifetime mortgage (the most popular type of equity release) to release money for a wide range of reasons. Once you’ve paid off any outstanding mortgage on your home, you’re left with tax-free cash that you can use for almost any lawful reason.

      This includes releasing money to use as a deposit on another property, or even to buy another property outright if you can release enough. For example, you might release cash in order to:

      • Gift some money to children, grandchildren or other loved ones for them to use as a deposit on a home.
      • Fund the whole or part purchase of another property for yourself: some lenders include second home equity release or buy-to-let equity release plans in their product portfolio.

      As you can see, equity release can be a solution for when you lack the cash to buy another house. However, please do take care to weigh up all the pros and cons. These include the cost of compound interest rolling up on your loan, and potential inheritance tax implications if you gift money to others.

      Our selected equity release advisers can provide information to help you properly assess whether this is an appropriate way to fund the purchase on another property.

Your equity release options

See the links below for guides to the different types of lifetime mortgage, or call 0808 178 3055 or request a call back to arrange a consultation with our selected equity release advisers.

Product lump sum icon

Lump sum lifetime mortgage

Access a tax-free cash lump sum if you’re a homeowner aged 55 or over. You retain full ownership and can stay at home until you pass away or move into long-term care.

Read more about lump sum lifetime mortgage plans
Product drawdown icon

Drawdown lifetime mortgage

Instead of making a one-off cash withdrawal, you take an initial cash sum and additional funds as and when you need them. This helps to reduce the total interest you pay.

Learn more about drawdown lifetime mortgage plans
Product interest only icon

Interest-only lifetime mortgage

A more cost-effective method of equity release where you make voluntary interest payments to reduce or prevent compound interest building up.

Discover more about interest-only lifetime mortgage plans
Product enhanced icon

Enhanced lifetime mortgage

Certain health conditions or lifestyle factors could qualify you for higher cash releases or lower interest rates. A simple questionnaire is all that’s needed to check eligibility.

Read more about enhanced lifetime mortgage plans
Product second home icon

Second home lifetime mortgage

If you have a second home you may be able to secure a lifetime mortgage against it, or make your dream of a second home come true with a release from your main residence.

Read more about second home lifetime mortgage plans
Product buy to let icon

Buy-to-let lifetime mortgage

These specialist plans could enable you to release equity from a buy-to-let property, or to use the wealth in your home to help you make a buy-to-let investment.

Read more about buy to let lifetime mortgage plans

Another, much less common form of equity release may be a more suitable alternative to a lifetime mortgage. A home reversion plan is a type of equity release where you sell all or part of your property at less than market value in return for a lump sum, a regular income, or both. You stay in your home as a tenant, paying no rent, until you pass away or move into long-term care.