Ways to use home equity for retirement income

Your different options for releasing home equity for retirement

If you’re looking for ways to raise extra cash after you retire as your pension fund isn’t quite up to scratch, you might be considering how you can do this and keep your home too. We take a look at the ways you can use your existing home equity to top up your retirement income.

1. Remortgage on different terms

If you have an existing mortgage, you could look to rearrange this with your current or a different provider and start using the equity you’ve built up in your home for retirement income. A new loan deal may give you lower monthly repayments, or act as a loan to give you access to the cash tied up in your home.

The mortgage provider will examine your finances to make sure you can afford to take out a new mortgage and check that you’re eligible. Once you’ve remortgaged, you’ll need to make regular monthly payments and you will be at risk of losing your home if you don’t keep up with them.

You’ll need to check any changes to interest rates and understand how that affects your monthly repayments and the total amount you need to repay overall. You should also be aware of any early repayments charges that might come with taking out a new mortgage before the end of your current mortgage term.

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Who can use their home equity for retirement income?

If you’re interested in releasing equity for retirement so you can keep your home and increase your income, you’ll need to meet some eligibility criteria. Broadly speaking these are:

For a lifetime mortgage you, or the youngest applicant in a joint agreement, need to be 55 or over.
For a home reversion plan the youngest applicant needs to be at least 60.
For both types of equity release you need to own a house in the UK that’s worth at least £70,000.

There can be additional criteria that apply for specific products, and these vary from provider to provider.

Please be aware that equity release will reduce the value of your estate and may affect your entitlement to means-tested state benefits. If you’d like to find out more about lifetime mortgages and releasing equity for retirement, start by checking how much equity you could release with our online calculator: