Equity Release in 2025: How UK Retirees Are Using Their Property Wealth
As retirement approaches, many homeowners begin to explore how the value locked in their homes could be used to support their financial goals. Equity release—an option that allows individuals aged 55 or over to access the wealth tied up in their property without having to move—continues to grow in popularity. The latest data for Q1 2025 shows a strong start to the year, with more people than last year turning to equity release as a way to fund the retirement they desire.
This article highlights key trends shaping the equity release market, helping you understand how others are using their property wealth—and whether it could be right for you.
Why Are People Choosing Equity Release?
At Retirement Solutions we speak to all of customers after their mortgage has completed, the reasons why people are choosing to unlock value from their homes are changing. In the first quarter of 2025, the top motivations included:
- Home improvements and adaptations (39%): Whether it’s upgrading kitchens and bathrooms, installing energy-efficient features, or adapting a property for easier access, many retirees are investing in their living space to make it more comfortable and suitable for the years ahead.
- Clearing an existing mortgage (31%) Over one in three customers used equity release to pay off their remaining mortgage balance, removing a major financial burden and helping them achieve full ownership of their home in retirement.
- Gifting to family (25%): Increasingly, older homeowners are choosing to gift part of their wealth to children or grandchildren during their lifetime, often to help with property purchases, education costs, or to provide a financial cushion in challenging times
Things to Consider
Equity release isn’t suitable for everyone. It’s important to think carefully and consider both the benefits and potential drawbacks:
- Impact on inheritance: Releasing equity reduces the value of your estate. However, some plans allow you to ring-fence a portion of your home’s value for your beneficiaries.
- Effect on means-tested benefits: The money you receive could affect your eligibility for certain state benefits.
- Interest over time: Lifetime mortgages accrue interest which can grow over time if not repaid—though some plans offer voluntary repayments to help manage this.
The Bigger Picture: Market Growth and Consumer Confidence
Recent figures released by the Equity Release Council, the industry body promoting safe equity release standards, show that lending in Q1 2025 reached £665 million—a 32% increase compared to the same period in 2024. This marks the fourth consecutive quarter of market growth, underlining continued confidence among consumers and advisers alike.
Several factors are contributing to this growth:
- A 14% increase in new customers choosing lump sum lifetime mortgages
- A 23% rise in the average amount borrowed, which now stands at £127,414
- Greater awareness of the benefits of modern equity release products, such as guaranteed fixed interest rates, no negative equity guarantees, and flexible repayment options.
How Equity Release Could Support Your Retirement
While every individual’s circumstances are different, here are some common ways equity release is being used to support retirement:
- Boosting Retirement Income: With inflation and rising utility bills affecting many pensioners, accessing a portion of home equity can help supplement retirement income and reduce financial stress.
- Staying Independent Longer: Home modifications funded through equity release can enable people to live independently and safely for longer—delaying or avoiding the need for residential care.
- Early Inheritance: Helping loved ones now, when the financial support is needed most, can bring a sense of purpose and joy, especially if it helps them achieve milestones like homeownership.
- Debt Consolidation: For those carrying credit card or loan balances into retirement, consolidating them through equity release can reduce monthly payments.
- Enjoying Life: Whether it’s travelling the world, pursuing hobbies, or just enjoying more day-to-day leisure, many use the funds to live retirement to the fullest.
Take Expert Advice
Speaking to a qualified financial adviser is essential. They’ll help you explore all your options—including alternatives like downsizing or using other savings—and explain how equity release could fit into your broader financial picture.
Looking Ahead
With the equity release market showing strong growth and consumers using the products in increasingly diverse ways, 2025 looks to be another pivotal year. As retirement needs evolve, and with family support and everyday expenses becoming top priorities, equity release is becoming a more mainstream part of financial planning.
