An increasing number of homeowners aged over 55 are considering equity release to either access a large lump sum, top up their pension or even to fund renovations for their home.

But what is equity release and who are the best providers currently?

What is equity release?

The value of your home, known as equity, is determined by subtracting any outstanding mortgage balance from the total market value. Essentially, it represents the amount you would receive if you were to sell your home outright.

But what if you want to keep your home and still tap into this financial resource?

Fortunately, if you have paid off a significant portion or the entire mortgage, you have the option to explore an equity release plan.

By opting for equity release, you can unlock a substantial amount of money while retaining the right to live in your home.

This can be particularly beneficial when you're faced with significant expenses later in life, such as long-term care. 

What are the different types of equity release?

The two most popular types of equity release are lifetime mortgage and home reversion.

Lifetime mortgage

This is the most popular type of equity release.

You borrow a lump sum in the form of a mortgage, which is eventually repaid from the sale of your home either when you die or move into long-term care.

The amount you can borrow is usually between 18 per cent and 50 per cent of the property’s total value – typically the older you are, the more you can release.

Home reversion

With a home reversion scheme, you sell all or part of your property, but with a legal right to continue living in it until you die or move into long-term care.

The money can be paid to you either as a lump sum or as a regular income, whichever you prefer.

Which equity release companies are the best?

In this article, we’ll reveal some of the best equity release companies, all of which are regulated by the Financial Conduct Authority (FCA) and are members of the Equity Release Council. 

Equity release isn’t the right option for everyone, so it’s worth doing your research and considering independent financial advice before making a decision.  

Now, we’ll run through some of the leading equity release providers in the UK. 

1. Aviva 

Aviva is the UK’s largest insurance company and has won several awards for their equity release service.

Their minimum mortgage loan is £15,000, for which you must be either mortgage-free, or have only a small mortgage on your property. 

2. Canada Life 

Canada Life specialises in retirement, investments, and protection products.

They offer various equity release plans, including a second home mortgage.

Canada Life also offers voluntary repayment plans, which can protect you from early repayment charges. 

3. Just 

Just offers a large range of financial products for retirement, including an equity release mortgage.

Some mortgages have fixed monthly interest, which is agreed at the start of your plan.

The company also offers a home reversion service, aimed specifically at people over 65 who wish to sell a portion of their home to release a cash lump sum.  

4. Legal & General

Legal & General offer various equity release mortgages.

You can take a cash lump sum and choose to pay interest as it accrues or let interest roll-up.

Alternatively, you can opt for an income mortgage, which allows you to draw down monthly income or choose a loan that has no early repayment charges. 

5. LV 

Not only does LV offer car insurance, but they also provide many investment and retirement services.

There are two equity release options: a flexible payment loan and a lump sum version.

The flexible equity release product allows you to borrow different amounts at different times, up to a pre-agreed maximum amount.  

6. More2Life

More2Life has a range of equity release plans with ‘enhanced’ options.

These are designed to take your medical history and current health into account, which may give you lower interest rates and higher borrowing limits. 

7. Sunlife 

Sunlife offers many equity release services to people over the age of 50, as well as support and advice.

You can find a wealth of information on their website about releasing equity and will be allocated an adviser when you get in touch. 

The best equity release interest rates

We’ll now reveal some of the best equity release rates for lifetime mortgages as of 1 June 2023. 

These rates are correct as of 1 June 2023 and may have changed but they give an idea of what rates to expect.

What you need to consider with equity release

It’s vital that the equity release provider you choose is a member of the Equity Release Council so you will be protected with capped interest rates for lifetime mortgages.  

As with any major financial decision, it's a good idea to get independent financial advice.  

A financial adviser can look at your circumstances and financial goals to recommend the best action or financial products for your needs.