For many retirees, their private pensions will do most of the hard work to provide an income when they’re no longer earning.
There are some, however, who may end up with little in the way of pension savings, but have considerable property wealth that they could use to supplement their income.
Here, we explain how you might use the equity in your property to achieve a comfortable retirement.
Equity release often overlooked
With property accounting for 40% of total household wealth in the UK, accessing this wealth is likely to be increasingly important for people looking to strengthen their retirement finances.
However, recent research from Canada Life found that equity release – which allows older homeowners to access some of the value in their home without having to move – is largely still absent from retirement planning discussions.
Just 7% of homeowners were presented with equity release as an option during retirement conversations with a financial adviser.
The research also found that misconceptions around equity release persist – over two thirds (67%) of people surveyed by Canada Life did not know that you could still pass your home onto your children after you have released equity, and 63% did not know whether you could move house after doing so.
How equity release works
Lifetime mortgages are the most popular type of equity release. You take out a loan against your property, which is repaid from the proceeds when it’s sold.
The amount you can borrow depends on your age and how much your home is worth. You’ll need to be at least 55, but the older you are, the more you can borrow.
Exactly how much you can borrow will vary markedly from provider to provider. Currently, at age 65 you’ll typically be able to borrow a maximum of between 35% and 39% of the market value of your home, rising to between 40% and 44% at age 70.
Borrowers can opt to take a lump sum – where interest is charged on the whole amount at a fixed rate – or take chunks of cash when they need it, only paying interest on the money they’ve taken.
By spreading out the amount you borrow in this way (known as ‘drawdown’), you’ll reduce the impact of compound interest.
Is equity release right for you?
The equity release market is growing, with total lending up by 11% in 2025 to £2.6bn, according to the Equity Release Council.
A lifetime mortgage can prove useful if you have value tied up in your property, but are worried about having enough to live on in retirement, paying for care or funding large expenses.
You can use the tax-free cash however you wish and will be able to stay in your home for the rest of your life or until you move into care.
Arranging an equity release plan is not a decision to be taken lightly. It can be very expensive, especially if you don’t make any voluntary repayments. This means that the amount you can leave behind for loved ones will be reduced.
If you change your mind, repaying your loan early often triggers an early repayment charge.
- Find out more: the pros and cons of equity release
Could downsizing be the answer?
Downsizing is another way that you can use your home to potentially unlock hundreds of thousands of pounds for your retirement.
However, research from Hargreaves Lansdown shows that only 19% of people said they would consider moving to a smaller home in retirement.
When asked why they wouldn’t consider downsizing, 37% said they didn’t want to move anywhere smaller, and a further third said they were attached to their home.
More people could downsize in future as a result of changes to inheritance tax rules. The inclusion of pensions in people’s estates for inheritance tax purposes from April 2027 will bring many more estates into the tax-paying net, and will lead to a rise in people seeking to reduce the size of their overall estate.
Downsizing is a simple way to achieve this – and it means you can give away some of the money raised to loved ones sooner rather than later.
Of couse, there are also costs associated with downsizing that you’ll need to consider – including stamp duty, estate agent fees and conveyancing costs.
Talk to an expert
Using your property to supplement your retirement savings shouldn’t be a decision you take on your own.
You must take professional advice before releasing equity from your home, and it’s important to choose an adviser who specialises in this area. Advisers should hold one of the following approved qualifications:
- CeRER (Certificate in Regulated Equity Release) – awarded by the Institute of Financial Services (IFS).
- CER (Certificate in Equity Release) – awarded by the Chartered Insurance Institute (CII).
- ERMAPC (Equity Release Mortgage Advice & Practice Certificate) – awarded by the Chartered Institute of Bankers in Scotland. The ERMAPC was discontinued a few years ago but may still be held by some advisers.
You can search for qualified advisers through the Society of Later Life Advisers. The Equity Release Council also has a member directory.
Downsizing has considerable implications for your tax and retirement planning. If in doubt, you should speak to a financial adviser to make sure you have a sensible plan in place.
- Find out more: how to find a financial adviser