With double-digit growth, the equity release market is once again expanding

Is it appropriate to release cash from your property?

New lifetime mortgages have increased by 11% in a year, according to industry data, but experts caution about the risks. Is it worthwhile to unlock cash from your house?

In order to meet their later-life needs and even avoid NHS waiting lists, more and more senior homeowners are turning to equity release products.

Although the appeal of equity releases has diminished in recent years due to rising interest rates and slower home price growth, recent industry data indicates that consumers have been using the product again, particularly as the cost of retirement continues to rise.

The most common kind of equity release product, 5,620 new lifetime mortgages, increased by 11% in just the first three months of 2025, according to data from UK Finance. The amount of this loan, which was worth 530 million, increased by 39.5 percent from the same quarter last year.

Retirement interest-only mortgages now make up 339 of the market, a 19% increase in just one year. This lending had a value of 33 million, which was 17 percent higher than the same quarter last year.

In Q1 2025, 38,510 new loans were also made to borrowers who were over 55. This represents an annual increase of 34%. And at 6.1 billion, the loan's value was 42.6 percent higher than it was in the same quarter last year.

In response to the UK Finance Later Life Lending Statistics, Jim Boyd, CEO of the Equity Release Council, stated: "The market is rapidly transitioning from a niche to a mainstream market, with a growing number of senior clients depending on advisors to help them understand their options, which include later life mortgages, retirement interest-only mortgages, and equity release.

Still, there is room for more growth as half (51 percent) of UK households are predicted to need to use housing wealth to support their retirement spending needs, even though the increase in equity release borrowing is consistent with the Council's own Q1 figures.

For what purposes do people use equity release?

Homeowners over 55 can access funds that are locked up in their property, usually through a lifetime mortgage, through equity release.

In order to only owe interest on the amount they draw down, borrowers can take out a lump sum and save the remaining amount for later access.

"Lifetime mortgages continue to dominate the landscape, accounting for the vast majority of equity release deals," stated Sarah Coles, head of personal finance at Hargreaves Lansdown. These enable borrowers to take out loans secured by their homes, with interest accruing and being paid back when the property is sold in addition to the loan.

On the other hand, we are also witnessing a rise in retirement interest-only mortgages, where the principal is paid back only when you sell your home or die.

For people who have a lot of property equity and those who have gaps elsewhere, they are both options. According to her, retirement interest-only mortgages can offer a one-time cash infusion for a particular purpose, like home renovations or medical expenses, while lifetime mortgages can be useful for those who are unable to cover their daily expenses with their pension.

With fewer NHS services available and lengthy waiting lists, the product seems to be addressing gaps in access to healthcare.

"People have also been using equity release to pay for hip or knee replacements because of NHS delays brought on by the pandemic," says Scott Gallacher, director of financial advising firm Rowley Turton.

If you have money invested in your house but are unable to enjoy your retirement because of a shaky hip or knee, it's not worth much.

Additionally, he has witnessed consumers use the product to finance solar panels in order to lower their energy costs.

The equity release risks.

If you want to obtain financing later in life and don't meet the requirements of traditional lenders, equity release is a helpful product.

Though the industry has been criticized recently for exorbitant fees and ambiguous product terms, it has made an effort to enhance its reputation by offering more adaptable and transparent products.

Rates for lifetime mortgages are higher than those for regular mortgages, ranging from 7 to 8 percent, while those for a conventional home loan are approximately 5 percent.

The biggest risks are that you will leave your loved ones with a bill after you die or enter care, which usually means the family home will have to be sold, and that you will eventually be able to leave a smaller inheritance.

You can typically set aside a portion of the proceeds from the sale of your property to leave as an inheritance, which is "more of a concern for your children than you," according to Turton. Some contemporary equity release products allow borrowers to make repayments.

Without fully comprehending the ramifications for you and your family, you should not enter into an equity release.

According to Coles, "the interest rate is higher than on a typical mortgage, and there are some significant fees. All of this will accumulate and be paid back after your death if you have a lifetime mortgage, so the longer you borrow, the higher the cost. Because of compounding, the amount owed on the loan can easily double over a ten-year period.

If you decide to downsize later, equity release can also prevent you from doing so, she said: "In certain cases, the debt has eaten up so much of your home's equity that you wouldn't be able to afford a smaller place if you were to sell and repay the loan."

In contrast, retirement interest-only mortgages have the potential to increase your expenses, which could lead to future issues after you've spent the money borrowed against your house, she continued. You must know the precise monthly cost as well as how you plan to pay for it.

"It might be a last resort for a lot of people in their later years. You might want to think about it if you need to pay for care and are unable to sell your house. Even so, you should first discuss with your family whether you would be better off downsizing in order to free up the funds.