Equity Release, typically refers to a lifetime mortgage. Whilst a lifetime mortgage is another form of mortgage, it differs from a traditional mortgage as there are several eligibility criteria that apply. The most definite rule that applies, is age. All applicants must be over 55 years old.
If you’re under 55, the answer is straightforward: you are not currently eligible for Equity Release or later life lending. It’s one of the few hard rules in the later life lending market, and it applies no matter how much equity sits in your home or how strong your financial circumstances are. You can however remortgage your property, or see if there is a better deal out there for you.
If you’re 55 or over, though, the door is open and it’s worth finding out exactly what you could release.
Here’s everything you need to know about the minimum age, why it exists, and what to do next depending on which side of it you fall.
The Minimum Age for Equity Release Is 55
Every equity release provider in the UK sets a minimum age of 55. This applies across the board, whether you’re looking at a lifetime mortgage, a home reversion plan, or any other type of equity release product on the market.
If you’re applying jointly with a partner, the minimum age applies to the youngest applicant. So even if one of you is well past 55, if the other is 52, neither of you will meet the lending criteria until the younger of the two reaches 55.
Some equity release providers set their own eligibility criteria even higher than this baseline, certain home reversion plans, for example, are only available from age 60 or 65. But 55 is the absolute floor across the industry. There is no exception, no workaround, and no provider currently offering standard equity release plans to anyone younger.
If you’re under 55, equity release simply isn’t an option available to you yet, no matter your circumstances.
Why Can’t You Release Equity Before 55?
The minimum age isn’t arbitrary. Equity release works differently from a standard mortgage: instead of monthly repayments, interest is added to the loan over time and the whole amount, the loan plus interest, is normally repaid when the property is sold, typically when you pass away or move into long-term care.
Because of this structure, your age has a direct bearing on:
- How much you can borrow. The older you are, the higher the percentage of your property value you’re typically able to release, because the loan is likely to run for a shorter period.
- The lender’s risk. A loan taken out at 45 or 50 could run for decades before it’s repaid, during which interest continues to build. Lenders and the wider equity release market are structured around later life lending, not long-term borrowing for younger homeowners.
- Your own financial position. Locking away home equity for a much longer period, potentially decades before repayment, carries different risks, and different alternatives are usually more appropriate at a younger age.
This is why every equity release provider, and the Equity Release Council itself, treats 55 as the starting point for the entire product category.
If You’re Under 55: What Are Your Options?
Equity release isn’t available to you yet, but that doesn’t mean your home equity is completely out of reach. Depending on your circumstances, alternatives worth discussing with a financial adviser include:
- Remortgaging or a further advance on your existing mortgage, subject to affordability and lending criteria
- A secured loan against your property, taken out alongside your first mortgage
- A personal loan, for smaller amounts where you don’t want to secure borrowing against your home
- Downsizing to a lower-value property, releasing cash immediately with no interest or lending criteria involved
Each of these comes with its own eligibility criteria, interest rate, and considerations, a qualified financial adviser can talk you through what suits your personal circumstances and tax position, and flag anything relevant to your existing mortgage or other debts.
If You’re 55 or Over: You Could Be Eligible Today
This is where it’s worth taking action. If you’re 55 or older and there’s value in your home, you meet the fundamental eligibility criteria for equity release, and it’s worth finding out how much you could release before deciding whether it’s right for you.
What Is Equity Release?
Equity release lets homeowners aged 55 and over unlock some of the money tied up in their property as tax-free cash, without having to sell up or move out. You continue living in your home for as long as you wish, and the loan amount plus any interest is normally repaid from the sale of the property later on.
Types of Equity Release
There are two main types of equity release plans:
Lifetime mortgage. By far the most common type of equity release scheme. This is a loan secured against your home, but unlike an existing mortgage, most lifetime mortgages don’t require monthly repayments, interest simply rolls up over time at a fixed interest rate. Some plans do allow optional interest payments if you’d prefer to manage the balance as you go and reduce the amount owed in the long run.
Home reversion plan. Rather than borrowing against your home, you sell all or part of your property to a home reversion plan provider in exchange for a cash lump sum or regular payments, while retaining the right to live there rent-free for life. Home reversion plans are far less common than lifetime mortgages and typically come with a higher minimum age requirement.
How Much Equity Could You Release?
The loan amount you’re offered depends on your age, the value of your home, and the specific equity release lender’s criteria. Generally, the older you are, the greater the percentage of your property’s value you can access. An equity release calculator can give you a quick, no-obligation estimate, but a personalised illustration from a financial adviser will give you an accurate figure based on your actual circumstances.
What Does Equity Release Cost?
There are a few costs to factor in before you take out an equity release plan:
- Interest, charged at a fixed interest rate for the life of the plan in most cases
- A free property valuation, arranged by your adviser as part of the application
- An advice fee, payable to your financial adviser for arranging the plan
- Potential early repayment charges if you repay the loan in full ahead of schedule, some plans allow you to avoid these after a set period, so it’s worth checking the lending criteria carefully before you take out an equity release plan
Will Equity Release Affect My Benefits or Inheritance?
This is one of the most important questions to raise with your adviser. Releasing a cash lump sum, or accessing equity release funds through a drawdown facility, can affect means tested benefits, since it increases your available savings. It will also reduce the value of your estate, something to think about carefully if leaving an inheritance for your children or other family members matters to you. Many equity release plans now include inheritance protection features, allowing you to ring-fence a portion of your home’s value for family members from the outset.
What Can the Money Be Used For?
However you choose to use your tax-free lump sum, there are no restrictions from most lenders on how you spend it. Common reasons homeowners release equity include:
- Paying off an existing mortgage or other outstanding mortgages
- Covering household bills or freeing up extra money in retirement
- Helping family members with a house deposit or other financial support
- Home improvements or moving to a new property
- Clearing other debts, including credit cards and secured loans
- Simply boosting income for a more comfortable retirement
Next Steps
If you’re under 55, equity release isn’t the right route for now, but there are other options worth exploring, and it’s worth speaking to a financial adviser about what makes sense for your personal circumstances in the meantime.
If you’re 55 or over, we’d encourage you to get in touch. Our whole-of-market equity release advisers can talk you through your eligibility, your options, and how much you could release, with no obligation and no pressure at any point. Submit an enquiry today to find out where you stand.
