How does Equity Release work?

Equity Release is a way to unlock tax-free cash from your home, even if you still have a mortgage. You can do this from age 55, and if it’s right for you it can be a great way to give you access to some extra money. The way Equity Release works depends on the type of plan. There are a few different types.

Types of Equity Release

If you take out a loan through your Equity Release plan, the loan and any interest will be repaid after your death or if you enter long term care. Any type of Equity Release will reduce the money you have to leave behind as inheritance and could affect any means-tested benefits.

Type of Equity Release plan

How it works

Lifetime Mortgage

You get a lump sum of tax-free cash as a loan, but continue to own your home. The loan is secured against the value of your property, and you’ll pay interest on it which will increase the total amount that needs repaid.

Drawdown Lifetime Mortgage

Just like a Lifetime Mortgage, you get tax-free cash as a loan that’s secured against your property. However, with this type of plan you have more flexibility. You can take the money as and when you like instead of in one big lump sum.

Interest Only Lifetime Mortgage

Just like a normal Lifetime Mortgage, you get a lump sum of tax-free cash and continue to own your home. However, with an Interest Only Lifetime Mortgage you can pay back some of the interest. If you pay back all the interest, the amount you owe will never go up.

Home Reversion Plan

With a Home Reversion Plan, you sell all or part of your property to release money from it. You keep living in your home, and won’t pay any rent to lenders.


Call our experts at Giraffe Equity Release on 0800 622 6414 to find out more.

Call Giraffe equity release on 0800 622 6414 or send an enquiry here