At Friends Capital, we often speak with homeowners who are asset-rich but cash-poor. You may have built up significant equity in your home over the years, but if you’re over 55 and on a limited income, it can be challenging to access that wealth—especially if affordability checks or age limits prevent you from taking out a traditional mortgage.
This is where Home Equity Schemes come into play. These financial products are designed to help you unlock the value tied up in your property, giving you access to cash without having to sell your home and move out.
In this article, we’ll explain what Home Equity Schemes are, how they work, who they’re suitable for, and what to consider before deciding if one is right for you.
A note on how we work: Friends Capital does not advise on equity release itself. If a lifetime mortgage or home reversion plan looks like the right route for you, we refer you to a qualified partner who specialises in this area, and they advise you directly. Their fee is capped at a maximum of £1,795 and is payable only on successful completion. This guide is here so you understand the options before that conversation.
Home equity schemes allow homeowners—typically aged 55 and above—to release money from their property without having to make regular repayments or meet standard income requirements. These schemes fall under the umbrella of equity release, and the two main types in the UK are:
Both options enable you to stay in your home for the rest of your life or until you move into long-term care, but they work in different ways.
A lifetime mortgage is the most common type of equity release in the UK. It allows you to borrow money secured against your home while retaining full ownership of the property.
Some plans allow you to pay off the interest monthly to prevent it from compounding. Others let the interest roll up, meaning it’s added to the loan balance each year.
With a home reversion plan, you sell a share of your property (or the full property) to a provider in exchange for a lump sum or regular payments. In return, you get to live in your home rent-free for the rest of your life.
At the end of the plan, when the property is sold, the provider receives their agreed share of the proceeds. For example, if you sell 50% of your home, they’ll receive 50% of the sale price, regardless of how property values have changed.
Feature
Lifetime Mortgage
Home Reversion Plan
Ownership
You keep full ownership
You sell part or all of your home
Age requirement
55+
60+
Repayment
From property sale after death or care
Provider takes share of sale value
Interest
Charged and compounds if unpaid
No interest charged
Inheritance impact
Reduces estate due to loan and interest
Reduces estate due to ownership share sold
Flexibility
More flexible
Less flexible
These schemes are designed for homeowners who meet specific criteria. While each provider has its own policies, general eligibility includes:
It’s important to note that lenders and equity release providers will assess your property’s condition, location, and construction type when deciding whether to approve your application.
There are a variety of reasons why someone might consider equity release:
These schemes offer a way to access capital without the upheaval of selling or downsizing.
As with any major financial decision, there are risks and trade-offs involved.
The amount you can access depends on a few factors:
Typically, the older you are, the more you can release. Some providers offer up to 50% of your home’s value if you’re over 80.
Our partner only recommends equity release schemes from providers that are members of the Equity Release Council. This means you’ll benefit from key protections:
Equity release is not for everyone. It can be a useful tool for the right circumstances, but it’s essential to explore all your options before committing.
We can advise you directly on the mortgage alternatives above, including later-life interest-only and remortgaging. If equity release turns out to be the better route, our partner takes it from there.
We offer a friendly, no-obligation conversation to explore your needs and help you work out whether a home equity scheme is worth considering at all—including whether one of the alternatives would serve you better.
What we do:
Friends Capital is authorised and regulated by the Financial Conduct Authority (FRN 650114). Equity release advice is provided by our partner, not by Friends Capital.
Ready to explore your options?
Get in touch with Friends Capital today to book your free consultation and find out if a Home Equity Scheme could support your future.
Contact one of our experienced mortgage advisers today to talk through your later-life options.