A lifetime mortgage is a loan secured against your home: you keep ownership, but a rolled-up balance can grow over time. Home reversion means selling all or part of your home to a provider, usually for less than market value; you give up ownership of the share sold but may remain living there under the plan’s tenancy terms. Neither option is right for everyone. The better fit depends on your cash needs, age, health, future plans, inheritance wishes and the exact terms in your offer.
How the two plans work
Lifetime mortgage: borrow against your home
A lifetime mortgage is a loan secured on your property. You continue to own and live in your home. Depending on the product, you may take a lump sum or draw down money in stages. Interest may be added to the loan or paid as it accrues; if it is rolled up, later interest is charged on the enlarged balance. The loan is normally repaid from the home’s sale after the last borrower dies or moves permanently into long-term care, subject to the contract. Some plans allow voluntary interest or capital payments.
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MoneyHelper says providers typically set a minimum applicant age of 50 to 55 for lifetime mortgages, while its general overview describes equity release as usually aimed at homeowners aged 55 and over. These are indicative descriptions, not eligibility guarantees; the provider sets the criteria, and the property must be your main residence. MoneyHelper’s lifetime-mortgage guide gives £1,500 to £3,000 as an indicative range for fees to release equity, but actual costs vary. MoneyHelper: What is equity release? MoneyHelper: Lifetime mortgages
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Home reversion: sell a share of your home
A home-reversion provider buys all or a percentage of your property. You receive a lump sum or, with some plans, smaller payments over time. You no longer own the share sold, but may remain in the home under a lifetime tenancy arrangement. When the property is eventually sold, the provider receives the agreed share of the proceeds; you or your estate receive the remainder. There is no mortgage balance accruing compound interest on the share sold, but you give up that share’s future growth in value.
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MoneyHelper says home-reversion offers are usually 20% to 60% of market value and may vary with the applicant’s age. This is a guide, not a quote. Some plans may require applicants to be over 60 or 65, own the property outright and meet a minimum property value—typically £70,000 in MoneyHelper’s example. Provider criteria differ. MoneyHelper: Home reversion plans
What is the practical difference?
| Question | Lifetime mortgage | Home reversion |
|---|---|---|
| Do you still own your home? | Yes. The loan is secured against your home. | You sell all or a share to the provider, so you no longer own the part sold. |
| What happens to the value you give up? | If interest is rolled up, the debt compounds and can grow substantially over time. | The provider receives the future value growth on the share it bought. |
| How can you receive money? | As a lump sum or, where offered, through drawdown; interest may be paid or rolled up. | As a lump sum or, with some plans, staged payments. |
| What happens when the home is sold? | The loan and any interest due are repaid from the sale, subject to the contract. | The provider receives its agreed share of the sale proceeds; you or your estate receive the rest. |
| What happens to inheritance? | Less may remain if the loan balance grows or the property sells for less than expected. | Your estate does not receive the share sold, including its future growth. |
These differences do not establish which plan will cost less for your household. Compare your own personalised illustrations and assumptions, including how long the plan may run and what happens if you move or need care.
How ownership, moving and care terms affect your choice
Equity Release Council standards include the right to remain in your home for life or until moving into care. Relevant lifetime mortgages must have a fixed or capped interest rate under the standards. The Council also sets a no-negative-equity guarantee standard, but MoneyHelper says most—not all—Council-backed lifetime mortgages have one. Check whether the actual product complies and read the offer: MoneyHelper says borrowers must be told if a plan lacks the guarantee. A move to another property may depend on the provider accepting that home. MoneyHelper: What is equity release? Equity Release Council: Consumer information
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Repair Windows errors before they cause bigger problemsFix Now →Scan for outdated or missing drivers - takes under a minuteDriver Scan →Clear out junk files and repair common Windows errorsFree Scan →With either plan, establish exactly what the contract means by a permanent move into care and what you or a partner may do if you want to move. For home reversion, read the tenancy terms particularly carefully: ask about transfer to a new property, insurance, repairs, maintenance, ground rent or rent, and any conditions attached to staying in the home. For a lifetime mortgage, ask how moving, repayment and any early-repayment charge work.
How inheritance and financial support may be affected
Both plans can reduce what is left for beneficiaries, but in different ways: a lifetime mortgage leaves a debt to repay, while home reversion transfers ownership of the share sold and its future growth. Either plan may also affect means-tested benefits, grants, tax or local-authority care support. The effect depends on your circumstances, so ask for advice based on your income, savings, benefits and plans rather than assuming a particular result.
Age UK’s February 2026 Factsheet 65 recommends considering benefits and tax, alternatives, estate preferences, health and life expectancy, future plans, payment stability and fees. Age UK Factsheet 65 (February 2026)
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Do not compare only the amount of cash offered. Ask for all upfront and ongoing costs, and consider what you give up over time.
Do these 3 things before closing this tab:
1Repair Windows errors before they cause bigger problems2Scan for outdated or missing drivers - takes under a minute3Clear out junk files and repair common Windows errors- Lifetime mortgage: ask about advice, arrangement, valuation and legal fees; whether interest is fixed or capped; whether it is paid or rolled up; and any early-repayment charge or restrictions on voluntary payments.
- Home reversion: establish the share sold, the basis for the provider’s offer, any staged-payment terms, tenancy obligations, and costs for insurance, repairs, maintenance, ground rent or rent.
- Both: compare the personalised illustration with your likely moving and care plans, the effect on your estate and any possible impact on benefits or support.
The reviewed MoneyHelper and Equity Release Council consumer pages do not provide a dated, directly comparable current market-rate figure for the two plan types. A generic rate comparison would not show which personalised offer is cheaper overall.
Consider alternatives before releasing equity
Depending on your circumstances, you might meet the need without either plan. Alternatives identified by the Equity Release Council and Age UK include:
- a mainstream mortgage or further advance, if affordable and available;
- a retirement interest-only mortgage;
- a personal loan;
- help from family;
- taking a lodger; or
- checking whether grants or other support are available.
MoneyHelper advises: “Before deciding, you must speak to an equity release specialist about the risks or discuss other options with a mortgage adviser.” Equity Release Council: Consumer information Age UK Factsheet 65 (February 2026)
What to ask an adviser before deciding
Equity-release advice and sales are regulated by the FCA. Check the firm using the FCA Firm Checker, and ask:
- Does your recommendation cover the whole market, or a limited range of providers? What fees will you pay?
- How does the product meet your cash needs, and what are the eligibility rules?
- What are the likely effects on your benefits, tax, grants, care support and estate?
- What happens if you move, repay early or need long-term care?
- For home reversion, how does the tenancy work, can it transfer if you move, and what ongoing costs or staged-payment conditions apply?
- For a lifetime mortgage, how does interest accrue, can you make payments, and does the offer include a no-negative-equity guarantee?
For a lifetime mortgage, MoneyHelper says the adviser provides a personal recommendation and a Key Facts Illustration. The Equity Release Council says home reversion uses a home-reversion-plan illustration instead. Review the formal documents for costs, risks and potential early-repayment charges, and obtain independent legal advice as part of the process. MoneyHelper: What is equity release? Equity Release Council: Consumer information
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