An Equity Release Guide for Central London Homeowners in 2026
Kevin Gold created on 7th April 2026
Our equity release guide is for Central London homeowners financially planning for their future. While equity release is increasingly popular in Marylebone, Maida Vale, Mayfair and across the capital, it’s essential to understand the pros and cons. While we urge homeowners to speak to an equity release adviser, this guide is a good starting point.
What is equity release?
We can’t publish an equity release guide without first explaining what equity is. Equity is property value owned by the homeowner. If there is no mortgage on the property, the homeowner owns all the equity. If there is a mortgage, the equity is the amount the homeowner has paid off.
Equity release is a financial product that unlocks money tied up in a property, without the need for the homeowner to sell up and move out. Equity release is tempting if you want to continue living in your home into retirement but need cash to fund a certain lifestyle.
How does equity release work?
The starting point will be a property valuation. Once complete and the application approved, the homeowner will either: borrow a lump sum of money against the property, as you would a standard mortgage, or sell a portion of the property to a provider in return for a tax free lump sum.
Who can get equity released?
Different types of equity release are available to different homeowners. Some products are suitable for those aged 60 or older, whereas others are applicable to over 55s. As well as age, equity release providers will consider the value and condition of the property, the size of any remaining mortgage and even the health of the homeowner. So, if the question is ‘can you be refused equity release?’ the answer is yes, based on the provider’s criteria.
What types of equity release products exist?
There are three main equity release products:
1. Lifetime mortgages
Lifetime mortgages are for those aged 55 or older. This product is a tax free loan secured against the property, typically if the home is worth £70,000 or greater. The loan is repaid when the property is sold or when the homeowner enters long-term care. With lifetime mortgages, the homeowner retains full ownership of the property.
2. Home reversion plan
Aimed at those aged 60 or 65 and above, a home reversion plan sees a provider buy all or a portion of the property at a below-market rate. Although the homeowner receives a tax free lump sum, the provider becomes the owner of the home. The occupier usually retains a beneficial interest in the property.
3. Interest-only retirement mortgages
An interest-only retirement mortgage allows those aged 55 and over to borrow a lump sum against the property. Monthly payments, however, start immediately so the borrower will need a regular income.
Is equity release a good idea? Pros & cons explained.
Browse the table below to understand when equity release is a good idea, including the pros & cons of deciding to release equity.
Pros
Cons
Relatively quick access to tax free cash to use as you wish – to gift, clear debts or pay for holidays
The gift receiver may have to pay inheritance tax on the amount
Receive a lump sum or ‘drawdown’ smaller amounts when required – or combine both
Interest quickly compounds and builds, especially when equity is released aged 55
Ability to choose no monthly payments with lifetime mortgages or a home reversion plan
Loans or mortgages must be settled on death or in the case of long-term care, reducing the amount that can be bequeathed to loved ones
Allows the homeowner to stay in their property, even if their spouse passes away or goes into care
Homeowners may relinquish exclusive ownership of the property or have a ‘charge’ over the home
Can be used if the homeowner still has outstanding mortgages
Homeowners may have to pay an early repayment charge if the equity is used to clear existing mortgage debt
Usually no affordability checks and a more generous maximum borrower age
The interest rate attached to equity release products is usually above traditional mortgages
Lifetime mortgages can be remortgaged to gain a lower interest rate or to borrow more money
Interest rates change and the amount you owe may increase
Option to pay off some or all of your debt early
Will reduce interest but you may incur an early repayment charge and reduce your liquid assets
Applicable to leasehold and shared ownership properties
Extra checks and constraints may apply
Some products come with a negative equity guarantee that provides reassurance should your home’s value decrease
Factor in arrangement fees and legal costs
Release equity to fund a better retirement
Although equity release won’t affect your state pension, it may compromise other benefits such as Universal Credit and council tax reduction
Is there a better alternative to equity release?
If you need to free a lump sum of money, moving to a cheaper property should be your first consideration. Alternatively, it is wise to consider cashing in any other assets held, such as ISAs, investment bonds, stocks, shares or funds.
Where to get equity release advice
Sound legal advice is imperative if you live in Central London and are considering equity release. Choose an independent financial adviser who is registered with the Financial Conduct Authority and has membership to the Equity Release Council (ERC). ERC members are bound by strict guidelines and offer products that meet minimum standards, such as having a no-negative equity guarantee. Always get a solicitor to check any equity release plan you are considering.
Equity release FAQs
Can you be refused equity release?
Yes. Equity release providers assess several factors before approving an application, including the applicant’s age, the value and condition of the property, the size of any outstanding mortgage and, in some cases, the homeowner’s health. Each provider sets its own criteria, so being declined by one does not necessarily mean all options are exhausted. Speaking to an independent financial adviser registered with the Equity Release Council is the best next step if an application is refused.
How long does equity release take after valuation?
Once the property valuation is complete and returned to the lender, equity release typically takes between four and eight weeks to complete. The timeline depends on how quickly the legal work is processed, whether there are existing mortgages to settle and how responsive all parties are. Delays can occur if there are complications with leasehold documentation or shared ownership arrangements.
Can you release equity without remortgaging?
Yes. A home reversion plan allows homeowners to release equity by selling all or a portion of their property to a provider in return for a tax-free lump sum, without taking out a mortgage. Lifetime mortgages are technically a form of borrowing secured against the home, but they do not require the homeowner to remortgage in the traditional sense, as there are usually no monthly repayments.
Does equity release reduce inheritance tax?
Not directly. Releasing equity reduces the value of the estate tied up in property, but the cash received still forms part of the homeowner’s estate unless it is spent or gifted. If equity is gifted to family members, inheritance tax may still apply depending on the amount and when the gift was made. The seven-year rule on gifts is particularly relevant here. Professional tax advice should be sought alongside equity release advice.
Can you get equity release on a retirement flat?
In most cases, yes. Equity release products are applicable to leasehold properties, which includes many retirement flats. However, providers may impose additional requirements, such as a minimum remaining lease length, typically 80 years or more, and the property must meet their minimum value threshold. Some providers are more restrictive with age-restricted or sheltered housing, so it is worth consulting a specialist adviser.
Can I sell my house if I have equity release?
Yes. Homeowners with a lifetime mortgage can sell the property at any time. The outstanding loan, including any accumulated interest, is repaid from the sale proceeds. With a home reversion plan, the provider owns all or part of the property, so the sale proceeds are split according to the agreed share. Selling the property is one of the standard ways equity release plans are settled.
Can you pay back equity release early?
Yes, though early repayment charges may apply. Many lifetime mortgage products allow voluntary partial or full repayments, but the terms vary between providers. Some plans permit overpayments of up to 10% per year without penalty. It is essential to check the specific terms of any equity release product before committing, as early repayment charges can be significant.
Do you pay tax on equity release?
No. The money received through equity release, whether via a lifetime mortgage or a home reversion plan, is paid as a tax-free lump sum. This applies regardless of how the funds are used. However, any interest or returns earned by investing the released funds may be subject to tax, and gifting the money to others could have inheritance tax implications.
Understand your equity release options?
An up-to-date valuation will tell you how much equity you have in a property you own in Regents Park, Baker Street, St John’s Wood or in another North West London neighbourhood. Is there a better alternative to equity release? Potentially. Kubie Gold can present lateral move or downsizing plans as a substitute option. Contact our experts today.
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Kevin Gold
Kubie Gold Associates are an independent local firm of estate agents specialising in the Rental, Sale and Property Management of Residential Property in the North-West and Central London market
