Alternatives to equity release

If you are aged 55+ and own your home, or even still have some mortgage outstanding on it, equity release could let you unlock some of its value. It’s big advantage for many will be the fact that it’s a loan where you don’t have to make regular repayments. But it isn’t the right fit for everyone.

In this guide, we’ll explore some of the main alternatives to equity release, helping you weigh up which might suit your situation best. Let’s take a look at each option — and how they could work for you.

A quick recap: what is equity release?

Before diving into the alternatives, it helps to quickly understand what equity release actually is.

The most common form is a lifetime mortgage. That’s a loan usually repaid through the sale of your home when you pass away or move into long-term care. It’s available to homeowners aged 55 and over, and the money you release is tax-free and yours to spend however you like (once any existing mortgage is paid off).

A lifetime mortgage is a secured loan usually repaid through the sale of your home when you pass away or move into long-term care. You don’t have to make monthly repayments in the meantime, although some plans let you do so voluntarily.

Interest is typically added to your loan each month, and accrues through compound interest, meaning the the total amount owed grows over time. This can reduce the value of your estate and the inheritance you leave behind, so it’s important to weigh up the pros and cons carefully.

What are some alternatives to equity release?

Equity release can be a lifeline if you need extra cash - but it certainly isn't for everyone. It's important to look at alternative ways to get the money you need, and here are some to consider:

Use your savings

If you’ve built up savings over the years, this might be your easiest option. It’s money you can access right away, unless it’s tied up in some way. Plus, there’s no loan involved, so there’s no interest to repay.

Of course, you may be understandably cautious about dipping into your savings, especially if it’s money you’ve set aside for emergencies. If you’re unsure, consider whether you’d still feel financially secure after making a withdrawal. If so, this could be a cost-effective solution.

Sell unused assets

You may be surprised how much value is hiding in your loft, garage or spare room. Selling furniture, jewellery, collectibles, or even vintage clothing could provide a cash boost without touching your home.

There are plenty of places to sell, from online platforms like Vinted and eBay to car boot sales and auction houses for higher-value items.

Apply for grants

If you're looking to adapt your home for mobility, comfort or medical reasons, help may be available. You might qualify for a Disabled Facilities Grant through your local council, or support from charities such as Independence at Home.

Check your benefit entitlements

Many retirees in the UK are missing out on money they're entitled to. It’s worth checking whether you’re eligible for benefits such as Pension Credit, which could boost your income and unlock other perks like free dental treatment, a TV licence, boiler grants and council tax support. Check your entitlements at gov.uk

Consider remortgaging

If you still have a mortgage and need to access funds for something specific, like home improvements or paying off other debt, a remortgage might be an option. You could speak to your current lender about increasing your loan, or consult a mortgage adviser to see if a new deal elsewhere might work better for you.

Keep in mind that remortgaging usually means higher monthly repayments or extending your mortgage term, which may not be feasible in retirement depending on your income and lender criteria.

Look into a retirement interest only (RIO) mortgage

This is another way to unlock some of the value in your home. With a RIO mortgage, you borrow a lump sum and only pay the interest each month. The original loan is repaid when you die or sell the property.

Unlike a traditional mortgage, there’s no fixed term, but you must keep up with interest payments for the rest of your life. If that feels risky, you might prefer a lifetime mortgage that allows flexible or optional repayments instead.

Downsize to a cheaper home

Selling your home and moving to a smaller property or a less expensive area can free up a substantial amount of money. It can also be an opportunity to move somewhere more suitable for later life such as a bungalow, retirement flat or somewhere closer to family.

However, it does mean parting with your current home, and the process of moving can be emotional and physically demanding. Don’t forget also to factor in moving costs, estate agent fees, legal expenses, and potentially stamp duty.

Get help from family

It can feel awkward to ask loved ones for financial help, but sometimes an honest conversation opens doors you didn’t expect. Family members may prefer to help now rather than see their inheritance reduced through equity release later on. But do make sure you look into the pros and cons of this approach, and consider setting up a formal agreement so everyone is clear on any terms of the loan or gift.

Rent out a spare room

Do you have a spare room sitting empty? The government’s Rent a Room Scheme allows you to earn up to £7,500 per year tax-free by renting out a furnished room in your home.

This could provide a steady stream of income without having to borrow. Just make sure you're comfortable with the arrangement. Having a lodger does mean sharing your space, and it's important to understand your rights and responsibilities as a live-in landlord.

Considering alternatives is part of the equity release process

Even if you do think that equity release is right for you, it’s reassuring to know that helping you consider the alternatives should always be part of the service provided by specialist equity release advisers. They will help you look at the bigger picture and recommend the most suitable solution based on your personal goals and circumstances.