Equity release under 55: What are your options?

This content was reviewed and approved by Amy Fletcher.

If you’re under 55 and looking for ways to release equity from your house, you may have been told that equity release isn’t possible, however, that’s not strictly true. While equity release products like lifetime mortgages and home reversion plans are only available to those who are 55 and over, that doesn’t mean you can’t release equity from your home if you’re younger. Instead, there’s a few alternative options you have that you can consider.

The information on this page should not be considered as financial advice. If you are unsure what’s right for you, please make sure you speak to a financial adviser.

What is equity release?

Equity release is the process of accessing the cash you’ve built up in your home using products like a lifetime mortgage or a home reversion plan. You can learn more about what equity release is here.

What is the minimum age for equity release products?

Equity release products can usually only be taken out once you’re 55, although some equity release providers may stipulate a higher minimum age depending on the product you choose. On the other hand, some providers will allow you to take certain products out from 50 however they require you to make payments until you’re at least 55. Similarly, some financial advisers may also recommend waiting a few years to ensure you get the most out of your equity release plan if it is more financially effective for you.

Options to release equity if you’re under 55

If you are below the age of 55 and have been able to pay off your mortgage, or near to, then wanting to release some of that equity from your home is perfectly understandable. The extra cash can be useful for home renovations or helping your children to buy their first home for example.

However, if traditional equity release products like a lifetime mortgage aren’t yet available to you, what can you do? Here’s your options:

1. Remortgage with your current lender

If you’ve maintained good repayment standards with your current lender, then you might consider a remortgage. Remortgaging will pay off your existing mortgage and release the equity you’ve built up. This can help to release money from your home, although it can mean an increased monthly cost compared to your existing mortgage.

Remortgaging can work for some people, but you’d need to consider how much equity you’d want released as well as how long you’d want to keep paying for a mortgage. For example, if you’re 50 and considering remortgaging, then it may be worth waiting those five years to avoid high interest fees, or early repayment charges. When remortgaging, you will need to go through affordability checks, as well as a credit history check, as you would if taking out a mortgage for the first time.

Your home may be repossessed if you do not keep up with the interest payments.

2. Downsizing

While it may not be right for everyone, selling your current home to move to a smaller or more manageable property could be a route worth exploring. You could use this as an opportunity to move to a new village, try a unique way of living, or even move closer to family or friends.

By downsizing, you’re also freeing up homes for those who need more space, such as growing families or those wanting to live multi-generationally.

This option comes with its own challenges, as you may need to pay moving costs or move to an unfamiliar neighbourhood. If you have a larger home and have a lot of personal items, moving to a smaller property could be difficult, but it can be a freeing experience that sets you up for your retirement.

3. Rent a room out

If you’ve got a room or two spare, why not consider renting out a room? The government allows for up £7,500 of income from renting a room to be tax free. This, plus the people you’ll meet, can make it very rewarding.

That’s not to say it doesn’t come with its own challenges too, such as sharing living spaces such as kitchens or bathrooms, as well as having strangers in your own home. For some people, it may not be the right option, but for others it can be a good experience to increase monthly income without needing to borrow against anything.

Why can’t you use equity release before 55?

The main factor is risk. As a lifetime mortgage generally does not require you to make repayments and the interest is compounded, the total amount you owe can grow very quickly. The younger you take the lifetime mortgage, the longer the interest has to grow. Most lifetime mortgages have a “no negative equity” guarantee. 

This means that the providers of lifetime mortgages and home reversion plans want to ensure that they won’t be having to make up the shortfall themselves, so age limit equity release products reduce the risk of this happening.

Are you looking to release equity before 55?

Have you considered speaking to a retirement advice specialist? They will be able to guide you through your options. Any advice given is bound by FCA regulation, so you can be assured they wouldn’t recommend anything that doesn’t meet your best interests.

Learn more about retirement advice today.