Why do people use equity release?

In 2025 alone, UK homeowners released £2.57 billion from their properties, according to the Equity Release Council. Clearly, a lot of people are choosing to unlock property wealth in later life. So where is that money actually going?

Data from the Council shows how borrowers are using the money they release, based on a survey of financial advisers:

• Clearing an existing mortgage (25%): Removing the burden of regular mortgage repayments is the goal of many customers.

• Home improvements (21%): From updating kitchens and bathrooms to making homes easier to live in.

• Gifting to family (13%): Helping children or grandchildren with big life steps like buying a home.

• Holidays and lifestyle spending (6%): Travel, breaks and enjoying more free time.

• Cars and transport (4%): Replacing an old car or upgrading how you get around.

For many people, it’s not just about one thing. It is often a mix of clearing the existing mortgage, easing day-to-day money worries and funding an important one-off purchase.

What is equity release?

Whether you are looking at equity release yourself or helping a parent or grandparent explore their options, it’s important to understand what equity release actually is before deciding if it fits your situation.

Equity release lets you unlock some of the money tied up in your home without having to downsize or sell up. It’s usually available to homeowners aged 55 and over and allows you to access part of your property’s value as tax-free cash. You can take it as a lump sum or in smaller amounts over time.

The most popular form of equity release is a lifetime mortgage, which is a loan secured on your home. You can choose not to make any monthly repayments on the loan. Instead, the interest is left to roll up each month. The loan and accrued interest are typically repaid when the home is sold, either when you (or both of you, if a joint plan) pass away or move into long-term care.

Some plans allow you to make regular interest payments to reduce how much will need to be repaid. You can also usually make voluntary repayments of the loan itself, often up to 10% of the original loan amount each year, although some plans may allow more than this depending on the lender.

What could you do with the money you release?

If you are thinking about whether equity release could work for you or someone in your family, it’s important to be clear on what the money would be used for. Equity release can be an expensive way to borrow money, so make sure you know why you are borrowing and the long-term benefits of the release.

Here are some of the reasons you may wish to unlock cash with an equity release plan:

When income doesn’t quite stretch far enough

A common situation in later life is being what’s often called “asset rich, cash poor”. In simple terms, that means you may own your home outright (or have a lot of equity in it), but your day-to-day income doesn’t quite cover everything you’d like it to.

Equity release can help bridge that gap by giving you access to tax-free cash, either as a lump sum or in smaller amounts over time. For some, it’s about easing severe financial pressures. For others, it’s about having a bit more freedom to enjoy retirement.

Paying off an existing mortgage or other debts

Another big reason people use equity release is to clear outstanding borrowing. Perhaps the most common debt people clear this way is their existing mortgage. In fact, it’s a requirement of an equity release plan that you clear any existing mortgage with some of the funds you release.

You can also use the money you release to clear other debt, such as credit cards, loans or store cards. When you release your tax-free cash to pay off debts, it will reduce your monthly outgoings, which can be a weight off your mind. Applying could itself ease pressure if your creditors are chasing you for payment or taking legal action against you

However, make sure you fully understand the implications of equity release before taking out a plan. For example, don’t forget that the loan plus interest will have to be repaid, usually through the sale of your house when you pass away or move into long-term care. That would likely reduce any inheritance you leave for loved ones.

Other options may be more suitable, such as taking out an unsecured loan to consolidate your debts into one monthly repayment or downsizing to a cheaper property. You may also consider a debt solution such as an individual voluntary agreement (IVA), where you typically agree to pay part of your debts back over time, with your creditors’ consent.

Make sure you get suitable advice before taking out an equity release plan (it’s actually a regulatory requirement that you consult with a qualified adviser before proceeding). Also, consider contacting a debt charity for free debt advice to consider all the available options.

Making home improvements

If you have decided to stay in the home you love for the foreseeable future, but need to do some work on it, equity release may be able to help. It could enable you to release a lump sum to:

• Adapt a home for later life (like adding a walk-in shower or stairlift).

• Carry out renovations or repairs.

• Upgrade your kitchen or bathroom.

• Build an extension or convert a garage to create more living space.

• Landscape a garden or build a conservatory.

• Upgrade your heating system, doors and windows to improve energy efficiency and comfort.

As always, look at other finance options too, but equity release has the advantage of letting you make the improvements you want without adding monthly repayments to your household budget.

Helping family financially

This is one of the key reasons many people look into equity release. You might want to:

• Help children or grandchildren get onto the property ladder.

• Support family with big life costs, like weddings or education.

• Pass on some of your wealth earlier, when it can make the most difference.

Helping family get onto the property ladder is one of the most common reasons people consider equity release, and it is easy to see why. With average first-time buyer deposits now around £23,000 across the UK and about £44,800 in London, it can take close to six years to save for a typical deposit, and even longer in higher cost areas.

Many over-55s are in a position where they hold significant property wealth themselves, which can sometimes offer a quicker way to help family get that all-important first step on the ladder. When used carefully and with the right advice, it can be a practical way to support family, while still keeping an eye on long-term financial needs.

Some people see this as a way of giving an “early inheritance”, rather than waiting until later in life. But do consider all the implications, including the inheritance tax implications of gifting money in the seven years before your death when passing on large amounts of money to loved ones.

Funding lifestyle choices

Equity release is one way to turn the value tied up in your home into money you can enjoy today. Instead of that wealth sitting quietly in bricks and mortar, it can fund the things that make life richer and more rewarding. For many homeowners, it’s an opportunity to enjoy the lifestyle they’ve worked hard for without needing to downsize.

Whether it’s finally booking that dream holiday, upgrading to a more comfortable car, or treating yourself and your family to memorable experiences, equity release can make it possible. It allows you to access funds at a stage in life when time, comfort and enjoyment often feel more valuable than ever.

Used carefully and with the right advice, equity release can provide the financial breathing space to focus on enjoyment, travel and quality of life. It’s not always about solving a financial problem: sometimes it’s simply about enjoying the lifestyle you’ve worked hard for.

Remember – it’s not the only option

Equity release isn’t right for everyone, and it’s important to consider alternatives too.

Depending on your situation, you might also think about:

• Downsizing to a smaller property.

• Using savings or investments.

• Taking in a lodger.

• Exploring other borrowing options.

As part of the equity release advice process, your adviser will talk these and other options through with you before you make a decision.

Is equity release right for you?

Equity release can make a real difference in the right circumstances. It can ease financial pressure, support family, or simply make retirement more enjoyable. But it’s also a long-term decision that, by its very nature, will reduce the value of your estate. Because of this, it’s important you really take the time to fully understand how it works and whether it’s right for you.

Compare More’s selected equity release advisers will help you understand the costs, risks and alternatives so you can decide if it’s the right fit for your circumstances. They will also search the market to find a plan that suits your needs and help you get the best deal on interest rates. You can start by using our quick equity release calculator to see how much you can release.