If you’re sitting on a valuable property but feeling a bit cash-poor, you’re not alone. Many UK homeowners, particularly those approaching retirement, find themselves ‘house rich but cash poor.’ The good news? Your home isn’t just a place to live – it’s potentially a source of funds when you need them most.

Here in Humberside and across the UK, more homeowners are exploring equity release as a financial option. But what exactly is equity release, and is it right for you? Let’s dive into the best ways to unlock the value tied up in your property in 2025.

What is Equity Release?

Simply put, equity release allows homeowners aged 55 and over to access the money tied up in their property without having to sell up and move out. The ‘equity’ is the current market value of your home minus any mortgage or secured loans still outstanding.

For example, if your Humberside home is worth £300,000 and you have £50,000 left on your mortgage, you have £250,000 in equity.

The money released can be taken as a lump sum, in smaller amounts as needed, or as a combination of both – depending on the plan you choose.

1. Lifetime Mortgages: The Most Popular Option

A lifetime mortgage is the most common type of equity release in the UK, accounting for around 99% of the market.

How it works: You borrow against your home’s value while retaining ownership. The loan, plus accumulated interest, is repaid when you die or move into long-term care, usually through the sale of your property.

Key features:

• Available to homeowners aged 55+
• You can typically borrow between 20% and 60% of your property’s value
• No monthly repayments required (though some plans offer this option)
• Interest rolls up over time (compound interest)

Worth considering if: You want to stay in your home and don’t mind reducing the value of your estate for inheritance purposes.

According to the Equity Release Council, lifetime mortgages now come with important safeguards, including a ‘no negative equity guarantee’ – meaning you’ll never owe more than your home’s value, regardless of how long you live or what happens to property prices.

2. Home Reversion Plans: Selling a Share of Your Home

Though less common than lifetime mortgages, home reversion plans offer a different approach to equity release.

How it works: You sell part or all of your property to a reversion company for less than its market value while retaining the right to live there rent-free until you die or move into care.

Key features:

• Usually available to those aged 65+
• You receive a tax-free lump sum
• The provider owns the percentage of your home that you sell
• When your home is eventually sold, the provider receives their share of the proceeds

Worth considering if: You want certainty about how much you’re leaving as inheritance, as the percentage of your home that you keep remains yours to pass on.

3. Drawdown Lifetime Mortgages: Flexible Access to Your Equity

A popular variation of the standard lifetime mortgage, drawdown plans offer greater flexibility.

How it works: Rather than taking one large lump sum, you take an initial amount and set up a reserve fund to draw from when needed.

Key features:

• You only pay interest on the money you’ve actually taken
• Potentially saves thousands in interest compared to a lump sum
• Provides flexibility to access cash when needed

Worth considering if: You don’t need all the money at once and want to minimise interest costs.

For more smart ways to manage your home finances, check out our guide to reducing household bills.

4. Income Lifetime Mortgages: Regular Payments to Supplement Retirement

For those looking for extra regular income rather than a lump sum, this option could be appealing.

How it works: You receive regular payments from your equity release provider, either for a fixed period or for life.

Key features:

• Provides a steady income stream
• Can help bridge pension gaps
• Interest is charged only on the amounts paid to you so far

Worth considering if: You need to boost your monthly retirement income rather than fund one-off expenses.

5. Interest-Only Lifetime Mortgages: Keep the Debt Under Control

For those who can afford some monthly payments, this option helps control the final debt.

How it works: You borrow a lump sum but pay the interest each month, preventing it from compounding.

Key features:

• The loan amount remains level throughout
• You’ll need sufficient regular income to cover interest payments
• Potentially leave more inheritance for your loved ones

Worth considering if: You have enough retirement income to make monthly interest payments and want to preserve more of your equity for the future.

6. Enhanced Lifetime Mortgages: Health Conditions Could Mean More Money

If you have certain health conditions or lifestyle factors that might reduce your life expectancy, you could qualify for more favourable terms.

How it works: Providers offer better rates or higher loan amounts based on health assessments.

Key features:

• Available to those with qualifying health conditions
• Could release more money than standard plans
• Often requires medical information or assessment

Worth considering if: You have health conditions like heart disease, cancer, diabetes, or lifestyle factors like smoking.

7. Second Charge Loans: For Those Who Don’t Want to Remortgage

If you have a favourable interest rate on your existing mortgage, this could be worth exploring.

How it works: You take out a separate loan secured against your property while keeping your current mortgage in place.

Key features:

• Doesn’t affect your existing mortgage terms
• Usually requires regular monthly repayments
• Can be arranged as a shorter-term solution

Worth considering if: You want to keep your existing mortgage deal and can afford monthly repayments.

8. Retirement Interest-Only Mortgages (RIOs): A Hybrid Option

Sitting somewhere between conventional mortgages and lifetime mortgages, RIOs offer another alternative.

How it works: You pay the interest monthly, and the loan amount is repaid when you die, sell your home, or move into long-term care.

Key features:

• Generally available to those aged 55+
• Requires proof you can afford the monthly interest payments
• The loan amount doesn’t increase over time
• Often lower set-up costs than equity release

Worth considering if: You have sufficient pension or other income to cover the monthly interest payments indefinitely.

According to MoneyHelper, RIOs typically have lower interest rates than lifetime mortgages, making them an attractive option for many retirees.

9. Equity Release Alternatives: Downsizing

Sometimes the simplest solution is the most effective.

How it works: Sell your current home and buy a smaller, less expensive property, freeing up cash from the difference.

Key features:

• No loans or interest to worry about
• You retain full ownership of your new property
• Potentially lower maintenance and energy costs in a smaller home

Worth considering if: You’re open to moving and don’t need to stay in your current home.

For tips on making a smaller space work better, see our space-saving ideas for small homes.

10. Letting Part of Your Property: Income Without Equity Release

For the entrepreneurial homeowner, this option generates income while keeping your property intact.

How it works: Rent out a portion of your property, such as a spare room, annexe, or converted garage.

Key features:

• Generates regular income without debt
• You can earn up to £7,500 tax-free through the Rent a Room Scheme
• Keeps your property’s equity intact

Worth considering if: You have space to spare and are comfortable sharing your property.

Making the Right Choice for Your Circumstances

Get Professional Advice

Always seek advice from a qualified financial adviser who specialises in later life lending. Look for advisers who are members of the Equity Release Council, which ensures providers adhere to strict standards of conduct.

Consider the Impact on Benefits

Releasing equity could affect your entitlement to means-tested benefits like Pension Credit, Universal Credit, or Council Tax Support. Your adviser should provide a personalised illustration showing how equity release might impact your specific situation.

Think About Inheritance

Most equity release plans will reduce the value of your estate. If leaving an inheritance is important to you, discuss this with your adviser and consider plans with inheritance protection features.

Compare Interest Rates and Costs

Equity release interest rates in 2025 are typically higher than standard mortgage rates. Be sure to compare products from different providers and understand all costs involved, including arrangement fees, valuation fees, and legal costs.

A Personal Note from Ruth

As someone who’s helped many Humberside homeowners navigate their financial options, I’ve seen firsthand how equity release can be transformative when used wisely – and problematic when rushed into.

My best advice? Take your time. Talk to family members who might be affected. Get multiple opinions from qualified professionals. And remember that equity release isn’t your only option – sometimes traditional solutions like downsizing or budgeting differently can achieve similar results without the long-term commitment.

Whatever you decide, make sure it fits not just your current needs but your vision for the next 10, 20, or even 30 years of your life.

Bonus tip: If you’re considering equity release to fund home improvements, check if you qualify for home improvement grants first. Many Humberside residents don’t realise they’re eligible for support that doesn’t need to be repaid!

Remember, your home isn’t just a financial asset – it’s where you’ve built memories and found comfort. Any decision about its future deserves careful consideration and the very best advice available.