If you’re exploring ways to unlock cash from your home later in life, you’ve likely come across the terms equity release and lifetime mortgage. While the two are often used interchangeably, there are some distinctions worth understanding.
In this guide, we’ll explain what equity release really means, what a lifetime mortgage is, and how the two relate—so you can make an informed financial decision that suits your circumstances.
What is Equity Release?
Equity release is a financial product that allows homeowners aged 55 and over to release tax-free cash from their property without needing to move out. The money released can be used however you like—whether that’s topping up retirement income, making home improvements, or helping family members.
There are two main types of equity release:
- Lifetime Mortgage – The most common form, where you borrow against your home’s value.
- (Home reversion plans are excluded based on your preference and are not discussed in this content.)
For most people, when they talk about equity release, they’re referring to a lifetime mortgage.
🔗 Related: What is an Equity Release Mortgage?
What is a Lifetime Mortgage?
A lifetime mortgage is a specific type of equity release product. It involves taking out a loan secured against your home. The key features include:
✔ You retain full ownership of your home.
✔ There are no mandatory monthly repayments—the loan is usually repaid when you pass away or move into long-term care.
✔ The loan accrues compound interest over time.
🔗 Learn more: How Does Equity Release Compound Interest Work?
How Are They Different?
In simple terms:
- Equity release is the umbrella term.
- A lifetime mortgage is the product most commonly used to release equity.
So, a lifetime mortgage is equity release—but equity release may technically include other options. However, the vast majority of people choose a lifetime mortgage when considering equity release.
Common Features of Lifetime Mortgages
The vast majority of lifetime mortgage plans come with helpful features that make them more flexible than many people expect:
✅ No-Negative Equity Guarantee
This ensures that you’ll never owe more than your home’s value, even if property prices fall—protecting your estate and your family.
✅ Inheritance Protection
The vast majority of lenders allow you to ringfence a portion of your property’s value so you can leave something behind for your beneficiaries.
🔗 More details: What Are the Risks of Equity Release?
✅ Voluntary Repayments
The vast majority of plans allow you to make voluntary repayments—either towards the interest or the loan itself—helping to manage the balance over time.
🔗 Related: Can You Pay Back an Equity Release Mortgage Early?
✅ Drawdown Options
Rather than taking one large lump sum, many plans allow you to access funds in stages—only borrowing what you need, when you need it.
🔗 Learn more: How Much Equity Can You Release?
What Happens When You Die or Move into Care?
The loan and any interest are repaid when you pass away or move into long-term care. Your home is usually sold at that point, and any remaining value goes to your estate.
🔗 More details: How Does Equity Release Work When You Die?
🔗 How Does Equity Release Work If You Go Into Care?
Can You Move House with a Lifetime Mortgage?
Yes—the vast majority of plans allow you to transfer your equity release mortgage to a new home, provided the new property meets the lender’s criteria.
This is known as portability and provides the flexibility to move if your circumstances change.
🔗 Related: Can You Take Out Equity Release on a Jointly Owned Property?
Should You Choose Equity Release or a Lifetime Mortgage?
Since a lifetime mortgage is the most common (and often most suitable) form of equity release, the real decision is whether equity release itself is right for you.
✔ Do you want to stay in your home and avoid monthly repayments?
✔ Do you need extra income or a lump sum for retirement?
✔ Are you happy for the loan to be repaid from your estate in the future?
If the answer is yes, a lifetime mortgage might be a suitable option.
🔗 Related: How Equity Release Could Help Fund Your Retirement
Next Steps
To explore whether a lifetime mortgage is right for you, or to learn more about your equity release options:
✔ Use our Equity Release Calculator to see how much you could unlock.
✔ Speak to a specialist through our Equity Release Adviser page.
✔ Read related guides:
- What is an Equity Release Mortgage?
- What Are the Pros and Cons of Equity Release?
