Equity Release Downside: What You Lose When You Unlock Home Equity

When you take out an equity release, a financial product that lets homeowners aged 55+ access cash tied up in their property without moving. Also known as a reverse mortgage, it’s popular among retirees looking to boost income or cover unexpected costs. But while it sounds simple—get cash, keep your home—the equity release downside can be serious if you don’t understand what you’re giving up.

One big risk is how it eats into your inheritance, the money or property you plan to leave to family. Every pound you borrow adds interest, and that interest compounds over time. By the time you pass away, the loan could be more than half your home’s value. That leaves little or nothing for your kids. Some people don’t realize this until it’s too late. Another hidden issue is the lifetime mortgage, the most common type of equity release where you borrow against your home and repay it only when you die or move into care. These often come with high interest rates—sometimes over 6%—and few options to make partial payments. If you don’t pay down the balance, your debt grows faster than your home’s value.

There’s also the risk of losing means-tested benefits. If you get a lump sum and don’t spend it wisely, your savings might push you over the threshold for pension credit, council tax reduction, or help with care costs. And if you later need long-term care, the state might ask you to sell your home to pay for it—only now, part of that sale goes to the lender. Plus, switching providers later is nearly impossible. Once you’re locked in, you’re stuck with the terms, even if better deals appear.

Not everyone needs equity release. Some people could get by with downsizing, working part-time, or using savings. Others might qualify for grants or support programs they didn’t know about. The decision isn’t just about how much cash you can get—it’s about what you’re willing to give up: control over your home, your family’s future, and your financial flexibility. The posts below break down real cases, current rates, repayment traps, and who truly benefits. You’ll see what happens when people don’t plan ahead, and what steps you can take to avoid the worst outcomes.