Equity release allows homeowners aged 55 and over to access the value tied up in their property without having to sell or move. In 2026, with many retirees asset-rich but cash-poor, it's an increasingly popular option.
There are two main types of equity release: lifetime mortgages (the most common) and home reversion plans. With a lifetime mortgage, you take out a loan secured against your home. The loan, plus interest, is repaid when you die or move into care.
The key concern for estate planning is that equity release reduces the value of your estate. The interest on a lifetime mortgage compounds over time, meaning the debt can grow significantly. In 2026, typical equity release interest rates are 5.5-7%.
This means a £50,000 release at age 65 could grow to over £150,000 by age 85, significantly reducing what your beneficiaries inherit.
However, there can be IHT benefits. By reducing the value of your estate, equity release can bring it below the IHT threshold, potentially saving your beneficiaries 40% tax on the excess.
The Equity Release Council's no-negative-equity guarantee ensures you never owe more than your home is worth. All reputable providers in 2026 are members of the Council.
Before considering equity release, we recommend discussing it with both a qualified financial advisor and an estate planning specialist. At Castle Family Legal, we can help you understand the implications for your Will and estate plan.
