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Start by identifying what kind of plan you are comparing
Equity release is not a single product. The two main types are lifetime mortgages and home reversion plans, and their costs work differently.
Lifetime mortgage
A lifetime mortgage is a loan secured on your home. You may receive money as a lump sum, in drawdown instalments or through a combination, depending on the product. For a fair comparison, match the amount and timing of borrowing, then compare the rate, payment options and illustrative balance over the period the loan could remain outstanding.
Home reversion
A home reversion plan involves selling all or part of your home to a provider, usually for less than its market value, in return for a lump sum or regular payments. An interest rate is not the right way to compare it with a lifetime mortgage. Instead, record the share being sold, the payment offered for it, the terms for living in the property and how much of any future property value remains with you or your estate. Get the valuation and occupancy terms from the actual offer; they are specific to the provider and agreement.
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Build a like-for-like comparison from the plan documents
MoneyHelper recommends using the Key Facts Illustration (KFI) to shop around and compare similar schemes. For every plan, enter the terms from its current KFI and offer into the same checklist. If a term is unclear or absent, ask the adviser or provider to explain it rather than assuming it matches another plan.
| Comparison area | What to record for each plan |
|---|---|
| Plan and borrowing | Lifetime mortgage or home reversion; amount or property share; lump sum, drawdown or combination. |
| Interest and balance | Rate shown in the current KFI; whether interest rolls up or can be paid; permitted capital repayments; illustrative balance over time. |
| Fees | Advice, legal, valuation, arrangement and completion charges; when each is payable; whether it is added to the loan. |
| Repayment flexibility | Whether payments are optional or required; permitted amounts and frequency; what happens if a payment is missed or stopped. |
| Early repayment | Maximum charge in cash, when it applies, how long it can apply and any circumstances in which it is not payable. |
| Moving and occupancy | Whether the plan can move with you, relevant restrictions or conditions, and what happens if you move into care. |
| Safeguards and personal effects | Whether a no-negative-equity guarantee applies and its conditions; tenure and property-use terms; possible effects on benefits, care funding and inheritance. |
The KFI describes the provider and plan, features, overall costs and fees, and— for a lifetime mortgage—the interest-rate deal and regular-payment information. The offer sets out the amount you will receive, fees and special conditions, such as clearing an existing mortgage. A solicitor reviews the details before completion.
Compare the full cost, not just the rate
List every charge and note whether it must be paid upfront, at completion or added to the borrowing. If a fee is financed under a roll-up lifetime mortgage, it becomes part of the balance on which interest may accrue.
MoneyHelper gives £1,500–£3,000 as a broad guide to equity-release application costs, including advice, solicitor, valuation and arrangement charges. Its inspected guidance page did not display a publication date; the figure is an indicative consumer guide, not a current quotation or a complete tariff for every plan. Use the fees in your own KFI and offer for the comparison.
Understand how interest and repayments affect a lifetime mortgage
Roll-up interest
With a roll-up plan, interest is added to the balance, and later interest is calculated on that larger balance. The longer the borrowing remains outstanding, the more compounding can increase the amount owed. Compare each plan’s rate and its illustrated balance over time, using the same borrowing amount and timing wherever possible.
Plans that allow interest payments
An interest-serviced plan allows monthly or one-off interest payments that reduce or stop the effect of roll-up. Some plans also allow capital repayments. Compare the permitted payment amounts and conditions, including what happens if payments stop or are missed; the rules are set out in the KFI and contract.
There is no single current market-wide equity release rate established here. Rates and terms are individual and change over time, so compare the rate in each current personalised KFI rather than relying on an older advertised figure.
Check early-repayment charges and moving-home terms
Early-repayment charges (ERCs) differ by plan: some plans have no ERC, some apply one for a defined period, and some may apply one throughout the plan. The Equity Release Council warns that these charges can be expensive.
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An FCA review described cases in which customers paid ERCs of tens of thousands of pounds after their circumstances changed only a few years after taking a loan. That is an example reported in the review, not an average charge or a forecast for any particular borrower.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Verify safeguards and consider personal consequences
MoneyHelper says most lifetime mortgages backed by the Equity Release Council have a no-negative-equity guarantee. Confirm whether the specific plan includes one and read the conditions. MoneyHelper also describes Council member standards that include security of tenure for life or until a move into care, no-negative-equity protection and fixed or capped interest. Check whether the particular plan meets those standards and what restrictions apply.
Equity release can affect future plans, care funding, means-tested benefits and inheritance. Accumulated loan interest reduces the equity that may be left to beneficiaries, and some plans restrict how the property can be used. The impact depends on your circumstances and the contract, so include these questions in the advice discussion.
Compare alternatives and check the advice
Before deciding, consider whether another approach could meet your needs:
- Downsizing to a less expensive property.
- A retirement interest-only mortgage, if the monthly interest payments are affordable.
- Using savings or cashing in investments.
- Discussing other mortgage options with an adviser.
MoneyHelper recommends speaking with an equity release specialist and checking that the adviser is FCA-registered. Ask whether the adviser searches the whole market, which plan types they can offer, and what advice and other fees apply. The adviser should provide a suitability or product confirmation letter and a KFI. Ask for an explanation of any fee, rate assumption or repayment condition you do not understand, and use the current documents to compare the plans side by side.
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