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Compare the current Key Facts Illustrations (KFIs) and offer documents for similar equity release plans—not just their headline rates. For each option, weigh the amount you receive against all fees, how interest or a property sale affects your estate, what repayments are allowed, the maximum early-repayment charge and the conditions for moving home. The right comparison depends on your circumstances and the specific contract.
This guide is for UK homeowners. Rates, fees, eligibility and contract terms vary and change; use personalised documents for a decision, not a generic market figure.
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Start by identifying what kind of plan you are comparing
“Equity release” covers different arrangements, so a rate comparison only makes sense between similar lifetime mortgages. MoneyHelper describes two main types:
| Plan type | How it works | What to compare |
|---|---|---|
| Lifetime mortgage | A loan secured on your home. Depending on the plan, you may receive a lump sum, draw money in instalments, or combine the two. Interest may be added to the balance or paid as you go. | Amount and timing of borrowing, interest basis, repayment options, fees, early-repayment terms, moving-home rules and safeguards. |
| Home reversion | You sell all or part of your home to a provider, usually for less than its market value, while retaining the right to live there under the plan’s terms. | How much of the property is sold, the amount paid for that share, residence and occupancy conditions, and how much of any future property value remains with you or your estate. |
A home reversion plan is not meaningfully compared with a lifetime mortgage using an interest rate: one involves a sale of a share of the property, while the other is a loan. For the specific valuation and occupancy terms of a home reversion offer, rely on its documents and specialist advice; general guidance does not establish provider-specific terms.
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Use current documents to compare like with like
Ask for the KFI for each plan being considered. MoneyHelper says it outlines the provider and plan, key features, fees and overall cost; for lifetime mortgages it also gives interest-rate and regular-payment information. Use illustrations with the same borrowing amount and timing wherever possible. A lump sum and a drawdown facility can have different borrowing patterns, so their projected balances are not directly comparable unless you account for when money is released.
For each plan, record the following from its KFI and offer. Product-specific values cannot be established from general guidance: they must come from the current documents.
| Comparison item | What to take from the documents | Why it matters |
|---|---|---|
| Plan and amount | Lifetime mortgage or home reversion; amount borrowed or property share sold; lump sum, drawdown, or a combination. | These structures create different costs and leave different interests in the home. |
| Interest and projected balance | Current KFI rate; whether interest rolls up or can be serviced; permitted optional capital repayments; illustrative balance over time. | The balance on a roll-up loan can grow through compounding. |
| Fees | Advice, legal, valuation, arrangement and completion charges; when each is due; whether it is added to the borrowing. | A fee added to a roll-up loan may itself accrue interest. |
| Repayment flexibility | Any minimum or optional payments, partial capital repayments and conditions; what happens if a payment is missed or stopped. | Payment rules affect both the balance and the consequences of a change in circumstances. |
| Early repayment | Cash examples and maximum charge; how long it may apply; circumstances in which no charge is payable. | A large charge can make a future sale or refinancing costly. |
| Moving and occupancy | Whether the loan is portable, conditions and restrictions on a move, and terms for a move into care. | Moving home may be subject to property criteria or other conditions. |
| Safeguards and personal effects | Whether a no-negative-equity guarantee applies and its conditions; tenure terms; property restrictions and stated consequences for benefits, care funding and inheritance. | These terms can affect your housing security, finances and estate. |
MoneyHelper recommends using KFIs to shop around and compare similar schemes. Ask the adviser to explain any unclear line rather than treating an illustration as self-explanatory.
Compare the full cost, not just the rate
List every charge and when it is paid
Include advice, legal, valuation, lender arrangement and completion charges. Note whether each is paid upfront, at completion or added to the loan. MoneyHelper gives £1,500–£3,000 as a broad guide to equity-release application costs, including advice, solicitor, valuation and arrangement charges. It is indicative consumer guidance, not a current quotation or a complete tariff for every plan; ask for the actual charges that apply to you.
Understand how fees affect a roll-up balance
On a roll-up lifetime mortgage, interest is added to the loan, and later interest is calculated on the increased balance. If fees are added to the borrowing, they can also accrue interest. Compare projected balances at relevant time horizons in each KFI, using the same assumptions about borrowing and timing. A low initial rate alone does not show the total amount that could be owed.
The FCA has warned that equity release can be expensive for short-term borrowing needs. Its review described the risk of “Short-term benefits, such as consolidating debts and freeing up cash, being wiped out by the long-term cost of equity release.” That is a general warning, not a prediction of the outcome for a particular borrower.
Read the interest and payment rules closely
Roll-up interest
With a roll-up lifetime mortgage, interest is added to the outstanding balance and future interest is calculated on that larger balance. The longer borrowing remains outstanding, the greater the effect of compounding. Check the rate and the KFI’s projected balance rather than relying on a rate in isolation.
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Interest-serviced and part-repayment options
Some lifetime mortgages allow monthly or one-off interest payments, which can reduce or stop the effect of roll-up; some also permit capital repayments. Compare whether payments are optional or required, the amounts and timing allowed, and any conditions or limits. Read what happens if payments stop or are missed in the illustration and contract: rules differ by plan.
There is no established market-wide “current equity release rate” to use as a representative benchmark here. Rates are plan-specific and change over time. Compare current personalised KFIs for the plans actually available to you.
Check early-repayment charges and moving-home terms
Find the maximum charge and when it can apply
Early-repayment charges (ERCs) vary: the Equity Release Council says some plans have none, some apply one for a defined number of years, and some apply one throughout the plan. Charges can be expensive. Compare the period covered, the maximum cash charge, the examples shown and any exceptions—not just whether a charge is mentioned.
For lifetime mortgages, FCA Handbook rule MCOB 9 requires the illustration to include cash examples and the maximum ERC as a cash amount, and to explain portability, relevant conditions or restrictions, and circumstances when no charge is payable. Locate those sections in the KFI and offer. “Portable” or “no penalty” without the applicable conditions is not enough to establish what will happen in your case.
The FCA’s review reported examples of customers paying early-repayment charges of tens of thousands of pounds only a few years after taking loans when circumstances changed. These are case examples from the review, not an average charge or a forecast for an individual plan.
Read the portability and occupancy conditions
Check what happens if you want to move: whether the loan can move to another property, what restrictions apply, and what happens if the proposed home does not meet the plan’s conditions. Also check the terms for a move into care and how long you or another permitted occupant can remain in the home. Do not assume that moving is automatically allowed or that a plan’s portability is unconditional.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Verify safeguards and consider effects beyond the loan balance
MoneyHelper says most lifetime mortgages backed by the Equity Release Council have a no-negative-equity guarantee. Check whether the specific plan includes one and read its 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. Confirm whether the provider and actual plan meet the relevant standards; do not infer a guarantee or protection solely from the product type.
Equity release can affect future plans, care funding, means-tested benefits and inheritance. Accumulated interest reduces the equity left to beneficiaries, and some plans restrict how you can use or alter the property. The consequences depend on personal circumstances and contract terms, so ask an adviser to address the effects relevant to your household and estate.
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Before committing, consider whether another option meets your needs with less long-term cost or fewer restrictions. Possibilities identified by MoneyHelper include:
- Downsizing.
- A retirement interest-only mortgage, if you can afford the monthly interest payments.
- Using savings or cashing in investments.
- Discussing other mortgage options with an adviser.
Ask whether the adviser is FCA-registered, searches the whole market, and can advise on both lifetime mortgages and home reversion or only certain plan types. Establish the advice fee and any other charges before proceeding. MoneyHelper recommends speaking with an equity release specialist; the scope of advice matters because it determines which options are being compared.
Use the offer documents before agreeing to proceed
- Request comparable KFIs. Ask for illustrations based on the borrowing amount and timing you are considering, and identify any different assumptions.
- Build a cost and terms comparison. Record the rows in the table above from each KFI and offer, including projected balances, fees, payment rules, ERC details and moving conditions.
- Ask about unclear or restrictive terms. Request an explanation of assumptions, fees, conditions, and what would happen if your plans change.
- Review the suitability or product confirmation letter. The adviser should provide this alongside the KFI; use it to understand why a plan has been recommended.
- Read the offer and have the solicitor review it. The offer sets out fees, the amount to be received and special conditions, such as clearing an existing mortgage. A solicitor reviews the details before completion.
Do not make the decision from a headline rate or a verbal description of protections. The contract-specific terms in the KFI and offer determine the comparison.
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Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.
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