What is equity release?

Put simply, equity release is a financial arrangement that allows homeowners who are 55 and over to access some of the money tied up in their property, without having to sell it.

There are two ways equity release can work:

A lifetime mortgage

A lifetime mortgage allows you to borrow against the value of your home, providing a tax-free percentage of equity, while you maintain ownership of your home.

A home reversion plan

With a home reversion plan, you can sell either some or all of your home in return for cash. You will be allowed to remain in your home, but become a tenant instead of the homeowner. After your home is sold, the company will take all or some of the proceeds from the sale depending on the percentage of your home you sold initially.

Equity release can be beneficial to those needing either a lump sum or regular income, but factors such as interest rates and benefits you may receive may not make it worth your while. It can also impact the potential inheritance you plan on leaving behind to your loved ones. 

Why consider alternatives to equity release?

Equity release can help you free up some money, but it might not be your only solution. From high-interest rates to the impact on inheritance, there are many good reasons to consider alternatives to equity release. 

Making the right financial decisions can depend on several factors. Some factors that could impact your decision to seek equity release include your:

•    Age
•    Health
•    Financial goals
•    Existing mortgage debt 

Assessing your personal circumstances can help you establish if equity release is right for you, or if there is a better alternative to equity release. Exploring the alternatives can help you make the right decision for your circumstances, taking your long-term financial wellbeing into consideration.  

equity release

​​​​​​​Alternatives to equity release

So what alternatives are there to equity release in the UK? Explore the following alternatives to work out if there is a different financial solution available to you to meet your needs.

Downsize to a cheaper property

Downsizing to a smaller or cheaper property can be an excellent way to free up some of your assets. As you get older, it might make more sense to sell your property and downsize, giving you a more manageable property to enjoy your retirement.


•    Can help you release a significant amount of equity.
•    Reduces your overall housing costs.
•    Makes your property easier to manage.


•    Can come with high transaction costs.
•    The property market can make it tough to find a suitable home.
•    You may have an emotional attachment to your current home, or envisioned leaving it to your loved ones.

Extend your mortgage term

With rising mortgage rates and increasing cost of living, remortgaging to extend your mortgage term could be a simple way to reduce your monthly payment costs.


•    Lower monthly mortgage payments
•    Maintain ownership of your home
•    Ease pressure caused by financial difficulties



•    Could increase your total interest paid over your term.
•    Mortgage extensions sometimes come with age restrictions.
•    It will take longer to pay off the balance of your mortgage.

Rent out a room

Do you have additional rooms you could rent out? If you’re comfortable with sharing your space, you could make some extra money while remaining in your home.


•    Generate extra income.
•    Make the most of your space.
•    Meet some new and interesting people.


•    Privacy concerns
•    Difficulties associated with being a landlord.
•    Tax obligations.

Releasing Equity Alternatives

Take out a retirement interest-only mortgage

You may wish to take out an interest-only mortgage if you can no longer afford a repayment mortgage. This could be useful if you plan to sell your home at some stage and benefit from an increase in value.


•    Maintain your homeownership.
•    Reduce your monthly payments. 


•    Interest-only mortgages are limited.
•    There may be age restrictions with an interest-only mortgage. 

Remortgage to release equity

You may be able to change your mortgage deal for a more favourable term. This could reduce your monthly payments, or help you release a lump sum.  


•    Access a lump sum.
•    Potentially lower interest rates.
•    Reduce the amount of interest paid overall.


•    There could be stricter lending criteria.
•    More favourable deals can be hard to come by.
•    Risk of losing your property if you miss repayments.

Local authority grants or loans

You may be eligible for some local authority grants or loans, providing you with funds to make home improvements, such as improving heating systems.


•    Can help you take care of repairs, adaptations and other needs.
•    Favourable or no repayment terms. 


•    Strict eligibility criteria.
•    Limited funding availability.

Get a part-time job

If you want to bring in some additional income, you could consider getting a part-time job. This could be a permanent or casual arrangement depending on your availability and how much you’d like to earn.


•    Can supplement your retirement income.
•    Could help you stay active.
•    Allows you to learn new skills or use your existing ones.


•    Impacts your time you could be spending doing something else.
•    Could impact benefits.
•    Potential tax implications for your pension.

Take out a personal loan

If you need a small amount of money for a short-term period, you could consider taking out a personal loan to help you give you the funds you need.


•    Flexible use of funds.
•    Fixed repayment schedule.
•    Receive funds quickly after acceptance.


•    Could be faced with a high interest rate.
•    Eligibility is dependent on credit score.
•    Repayments could be difficult to manage.

Use a credit card

If you’re able to secure a 0% or low-interest credit card, you could use it for short-term expenses that can be paid off quickly.


•    Provides immediate access to funds.
•    Many credit cards come with rewards such as cashback or air miles.


•    Potential for high interest rates.
•    Possible debt accumulation.
•    Unmanageable repayments.

Change your spending habits

If you can manage your budget and change some of your outgoings, you could free up more money each month, providing you with a debt-free solution to improving your finances.


•    Reduce your expenses.
•    Improve the way you manage your money.


•    Could require some lifestyle changes.
•    Can be difficult with increased cost of living.

Sell assets

If you have valuable assets that are not essential for your financial security such as a second home or a vehicle, you could sell them to free up some money to fund a big expense or add to your monthly income.


•    Generate some money.
•    Simplify your finances.
•    Sell items you no longer need or use.


•    Loss of assets.
•    Potential tax implications.
•    Assets may not be as valuable as expected. 

Get Help From Family or friends

If you have family or friends who could help you out in the short-term, it could be worth asking them for some assistance as opposed to seeking a credit solution.


•    No interest or repayment terms.
•    Could provide assistance quickly.
•    No impact on your credit score.


•    Dependence on others.
•    Could strain relationships.
•    Repayments could be difficult. 

State benefits

Depending on your circumstances, you may find that there are state benefits you’re entitled to that could help supplement your income.


•    Financial support in terms of grants or benefits.
•    Can help ease financial strain. 


•    Must meet eligibility criteria.
•    Benefits can change over time.

How to Determine the Best Alternative for You

To help you determine the best alternatives to equity release, you need to consider multiple factors, including your existing income and expenses, debts, and your long-term financial goals. You may want to try one or more alternatives to equity release to help you find a solution that doesn’t involve sacrificing the value of your home.

One of the best ways to help you determine whether equity release, or an alternative, is right for you, consider seeking professional financial advice. This can help you understand the implications of each option to help you decide on the most suitable move for you.

Consider how each alternative could play out in the long term. From your retirement plans to your inheritance goals, there are different elements to consider when deciding on alternatives to equity release.

Mortgage equity release alternatives

Tips for Making a Decision

Some final tips to help you decide between equity release alternatives:

1. Research your options thoroughly, including the overall costs and the risks involved.
2. Balance your short term needs with your long-term financial security. You may also need to keep a close eye on economic trends. 
3. Remember to consider your personal preferences and lifestyle. Your alternative should match your lifestyle, financial preferences as well as your tolerance to risk. 
4. Seek out professional financial advice to help you learn more about your options, including ones you might not have thought of.
5. While equity release may be suitable for some people, it’s not for everyone. Exploring alternatives to equity release can empower you to make a well-informed financial decision to help you in both the short and long term, helping you feel more confident in your financial situation.

With the help of TBI Law, you can get some helpful advice should you choose to sell your home. Contact us today for more information.