Equity Release Companies in the UK for 2025 and Information on Life Interest Trusts

Did you know equity release allows homeowners 55+ to access cash while living in their homes? Learn how choosing the right provider and understanding life interest trusts can protect your inheritance and maximize retirement income with expert advice and practical steps.

Understanding Equity Release in the UK

Equity release enables older homeowners to access cash based on their home’s value while continuing to live there. The most common types include lifetime mortgages and home reversion plans, with lifetime mortgages being the predominant option currently available. Typically, eligibility requires homeowners to be aged 55 or older and own a property valued at a certain minimum (often around £70,000).

How It Works: A loan is taken out secured against the property. Interest generally accumulates over time and is typically repaid when the homeowner passes away or moves into long-term care.
Potential Benefits: Provides access to a lump sum or regular income, which may support retirement without needing to downsize or sell the home.
Important Considerations: The loan and accrued interest will reduce the inheritance value of the property, so detailed planning and understanding of terms are important.

Notable Equity Release Companies in the UK for 2025

When selecting an equity release provider, factors to consider include interest rates, product flexibility, customer service, reputation, and adherence to regulatory standards. Providers regulated by the Financial Conduct Authority (FCA) and following the Equity Release Council (ERC) guidelines are subject to consumer protection measures.

Examples of Providers

Legal & GeneralOffers lifetime mortgages with competitive interest rates and a range of flexible options. They provide digital tools for customers but focus on their own product offerings.
More2LifeProvides tailored lifetime mortgage solutions with an online Fastpath portal to simplify applications, along with calculators for inheritance protection and loan-to-value assessments.
Canada LifeOffers a variety of equity release products aimed at different financial needs and includes online resources for customers.

Other Providers Worth Considering

Aviva: Known for offering flexibility in repayments and maintaining a strong financial position.
Hodge Lifetime: Provides a range of options, including unique product features.
Just Group: Offers various products suited to different customer preferences.
Age Partnership: Focuses on transparent and educational advice.
Responsible Life: Provides ethical financial advice alongside equity release options.

Consumer Protections Available

Voluntary Repayments: Since March 2022, customers with lifetime mortgages can make voluntary repayments of up to 10% of the loan annually without incurring penalties.
Regulatory Oversight: Providers adhering to FCA regulation and ERC standards are subject to rules designed to enhance transparency and consumer safeguards.

Considerations When Choosing a Provider

Review published interest rates, fees, and the flexibility of products.
Consult customer reviews on multiple reputable platforms.
Seek independent financial advice to compare options available across the market.
Verify FCA registration and ERC membership to confirm consumer protections.

Equity Release Advisory Support

The equity release market involves complex products that can have long-term financial implications. Consulting an FCA-regulated independent equity release advisor, ideally a member of the Equity Release Council, can help ensure suitability.

Advisory Firms Operating in 2025

Age Partnership
Bower Home Finance
Responsible Life
StepChange Financial Solutions
Your Choice Equity Release

These advisors provide tailored guidance, assist in comparing product features and costs such as arrangement fees, and support aligning equity release with your financial and estate planning goals.

Importance of Independent Advice

Helps avoid potential financial pitfalls.
Ensures compliance with legal and regulatory requirements.
Offers personalised recommendations based on individual circumstances.
Assists in understanding the impact on inheritance and tax matters.

Information About Life Interest Trusts and Estate Planning

Life interest trusts are legal arrangements enabling an individual (known as the life tenant) to benefit from a property during their lifetime, with the property passing to other beneficiaries afterward.

How Life Interest Trusts Operate

The life tenant may live in the property or receive income from it.
Upon the life tenant’s death, the property transfers automatically to designated beneficiaries (known as remaindermen).
Commonly utilised in wills to provide for a surviving spouse while preserving assets for children or other heirs.

Potential Roles in Inheritance Tax (IHT) Planning

Can help manage the distribution of property assets.
May have implications for the taxable value of an estate.
Might offer some protection against creditors or claims such as divorces concerning beneficiaries.

Using equity release loans on properties held within life interest trusts can involve complexities.
Some lenders’ terms or willingness to provide loans may be affected by the presence of such trusts.
Professional legal and financial advice is advisable before combining these arrangements.

Equity Release and Inheritance Tax Considerations

Equity release affects the value of an estate since the loan and accrued interest reduce the net value of the property. It may also factor into inheritance tax planning:

Borrowing against the property can reduce the estate’s value subject to inheritance tax.
The loan balance grows over time, potentially reducing the amount passed to beneficiaries unless carefully monitored.
Consultation with both tax and equity release specialists is recommended to understand possible implications.

The Use of Trusts in IHT Planning

Trusts may assist in reducing the estate value liable for inheritance tax but involve complex legal rules.
Seeking advice from a solicitor experienced in trusts and estate planning is recommended.
Certain will-based trusts can help defer or diminish inheritance tax charges.

Eligibility, Costs, and Guidance for Equity Release Applicants

Eligibility Requirements

Typically, applicants need to be aged 55 or over.
A minimum property value threshold often applies, commonly around £70,000.
The property type and condition must satisfy lender criteria.
A financial assessment is usually conducted to confirm suitability.

Costs to Consider

Arrangement or product fees vary depending on the provider.
Legal fees may be required for property valuations and contract completion.
Early repayment or completion fees might apply, although voluntary repayments up to 10% per year are now typically penalty-free.
Independent financial adviser fees vary; some offer initial consultations at no cost.

Suggested Approach for Applicants

Consult an independent equity release advisor to explore options.
Use available calculators to estimate potential equity release amounts.
Compare different products and providers based on published information.
Assess how equity release aligns with retirement and estate objectives.
Discuss repayment options to manage borrowing levels.
Understand the long-term effects on your estate and inheritance.

Summary

Equity release remains a financial option available in 2025 for UK homeowners aged 55 and over who wish to access their property’s value during retirement. Companies such as Legal & General, More2Life, and Canada Life offer various products with different terms and features. Consulting a regulated equity release advisor from firms like Age Partnership or Responsible Life can provide personalised, transparent advice.

Life interest trusts may play a part in inheritance tax planning, but their interaction with equity release can be legally complex. Combining these financial tools requires detailed advice. While equity release may affect inheritance tax liabilities, professional guidance is important to understand how best to use these options without unintended impacts on estates.

By becoming informed about providers, seeking qualified advice, and considering estate planning tools like trusts, homeowners can make more informed decisions regarding later-life finances.

Sources

Disclaimer: All content, including text, graphics, images and information, contained on or available through this web site is for general information purposes only. The information and materials contained in these pages and the terms, conditions and descriptions that appear, are subject to change without notice.

Finance