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Equity Release Alternatives

Looking to borrow in later life? Find all you need to know about equity release and the alternatives with our comprehensive guide.

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Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: June 17, 2022

If you’re 55 years old or over and looking to access some of the equity in your home without moving, you may be considering an equity release plan. This can be a good move that will allow you to free up money for retirement, make a dream purchase or provide a lump sum to a family member.

But this is a complex area of finance that is not always the best choice. In this article you’ll learn about some of the alternatives to equity release, what to consider when deciding what is right for you and why it’s essential you seek professional advice before making that decision.

Is there a better alternative to equity release?

Yes, there could be but it really depends on your own personal circumstances and reasons for wanting to raise funds using the equity in your property.

While it’s always advisable to look at the alternatives, there are occasions when equity release will clearly be the right choice. For example, you are automatically eligible if aged at least 55 and own a standard construction property outright that is worth £70,000 or above. If you meet these criteria, you could avoid lengthy and expensive application processes – even more so if you take a drawdown option.

But it can also be an expensive way to borrow, particularly if you are only just within the minimum age bracket, as it will run until the last surviving applicant dies or moves into long term care.

A lifetime mortgage (the most common form of equity release) avoids the needs for monthly payments but will significantly reduce the inheritance you leave for your loved ones. This is because the interest is compounded and paid off when the loan is settled.

If you choose a home reversion scheme, you could even find you transfer ownership of your property over at below market value.

Equity release can be a good way to access the equity you have built up and give yourself a little extra financial freedom in retirement. But getting it wrong is an expensive mistake so you need to be sure this is the right option for you and the only way to do that is by considering all the other viable alternatives.

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The main alternatives

If you’re not sure whether equity release is the right route for you to take, there’s a number of other options for you to consider before making a final decision, such as:

Retirement interest only mortgage

Commonly known as a RIO mortgage, this is like an equity release lifetime mortgage but with a key difference.

With a RIO mortgage, you borrow a lump sum and make monthly repayments to cover the interest. Rates start at around 2.29% and your capital amount remains unchanged no matter how long the loan runs for.

Interest only repayments make the loan more affordable and avoids compounded interest being added when the loan is settled. Assuming your property has increased in value by the time it is sold, you could still leave a healthy inheritance.

Remortgage to release equity

In many cases, a straightforward remortgage will be cheaper than equity release in the long run as rates are lower and you repay the interest and capital over the term of the loan.

If you have an existing mortgage which has not yet come to the end of its fixed term, you may be advised to wait before considering a re-mortgage to avoid paying early repayment fees. Whether you stick with your existing provider or remortgage with a new lender, you will need to meet their standard eligibility requirements.

Some will insist you are in employment or place an age cap on the loan, so borrowing into retirement can limit your choice of lenders. There are providers who apply no upper age limit to their mortgages but if the loan will take you into retirement they will often need to see further proof of income.

With that said, the equity you have built up over the years will often mean your loan-to-value (LTV) is quite low and you can benefit from preferential interest rates by finding a provider that specialises in later life lending.


If you have paid off your mortgage on your main residence and are happy to move to a smaller property, perhaps in a cheaper area, this could be your best move. The money you raise from the sale is tax free and can be used for any purpose. Moving to a smaller property can also reduce your council tax and household bills.

Sometimes though, leaving your family home or moving away from friends can be too much of a wrench. Even if you are prepared to move, it can take a long time to sell your house and if you need the money soon, this may not be your best option.

You would also need to calculate the expenses of moving house such as legal fees, estate agent fees, moving costs and possibly stamp duty, all of which could reduce the amount you receive from the sale. However, if you live in your new home for many years, those costs could be offset by its value increasing.

Secured loans

Secured loans are generally quicker and easier to apply for than a mortgage. The loan is secured against your property via a second charge so rates are lower than you would pay on an unsecured loan – but typically higher than for a mortgage. However, a secured loan over, say 10 years, could still be cheaper overall than taking out a mortgage over a longer term and into retirement. For smaller amounts a secured loan may be your preferred option.

In most cases, providers impose age and affordability restrictions as they would for a standard mortgage. There is no official maximum age for taking out a secured loan but lenders are obliged to lend responsibly and each has their own eligibility criteria. Lots have an age cap of 65 but there are lenders that don’t specify any age limit and assess each application on its own merits.

Personal loans

A personal loan will not be secured against your property so rates will be higher. The average rate for an unsecured loan is around 9.4%. Typically, you will need to be in employment and pass an affordability check regardless of any equity in your home.

Typically, the maximum personal loan is £25,000 with most mainstream lenders. Rates with other lenders are often higher.

Take in a lodger

The government’s Rent a Room Scheme allows you to let out one or more furnished rooms in your house and earn up to £7,500 per year tax-free.

This is not for everyone, but if you have space and are willing to take in a lodger, it can be a lucrative arrangement that doesn’t require dipping into your equity or savings.

If you’re considering this, it’s worth doing a trial run via Airbnb or another similar platform before making a longer term commitment.

Refinance an investment property

If you have other properties, you could look to raise funds from that in a number of ways:

  • Sell it
  • Rent it out
  • Borrow against the rental property rather than your main home

Which one should you choose?

The answer to this lies in your individual circumstances and preferences. You will need to speak to an equity release advisor to discuss all options before making your decision.

Downsizing or taking in a lodger will usually have the greatest impact on your day-to-day life, while RIO mortgages and equity release will arguably have the most effect on the inheritance you are able to leave behind.

The amount you need to borrow, how it will be used, and how quickly you need it will also influence your decision. If you need cash quickly to take advantage of an investment opportunity, for example, time is not on your side and the quickest method may therefore be preferable to the cheapest.

If borrowing for home improvements or a dream holiday on the other hand, you will normally have time to consider all eventualities and set your own timeline.

Fortunately, you can’t take out an equity release product without speaking to a qualified advisor. This should prevent you from rushing into one without giving it proper consideration. Not all specialists will be able to advise on all the alternatives though, so you will need to do your own research or speak to a whole of market mortgage broker for the full picture.

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Get matched with a later life lending specialist

When it comes to borrowing in later life, getting it right first time is essential as you may not recover financially from making an error.

The brokers we work with have whole of market access and are fully trained in advising on equity release products. Our broker matching service will put you in touch with a later life lending specialist who will conduct a thorough assessment of your financial circumstances and discuss your future plans before exploring all possible borrowing options. This will ensure you make a fully informed decision.

Call today on 0808 189 2301 or enquire online to arrange a free, no-obligation chat.


Are there equity release alternatives to a lifetime mortgage?

Yes. The less common alternative is a home reversion plan. This involves selling all or part of your home in exchange for a cash lump sum, regular income or combination of the two. It is expensive, risky and not recommended by most experts.

Are credit cards an alternative?

Credit cards are for short term borrowing. Building up debt on a credit card can be costly and lead to you simply servicing the debt without reducing your balance. It is not recommended for major purchases, particularly if you are heading towards retirement and anticipate a drop in income.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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