Lifetime mortgage or home reversion — a plain-English comparison to help you choose with confidence.
There are two types of equity release plan available in the UK, and they work very differently. This page puts them side by side so you can see exactly what each one means for your home, your finances, and your family — before you speak to anyone.
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Lifetime Mortgage |
Home Reversion Plan |
|
|---|---|---|
| How it works |
Loan secured against your home; interest rolls up until repayment |
You sell a share of your property in exchange for a lump sum or income |
| Upfront cost |
Arrangement fee, valuation, legal fees — typically £1,500–£3,000+ |
Valuation and legal fees; no arrangement fee, but you receive below market value for your share |
| Ongoing cost |
Interest compounds on the outstanding loan (fixed or variable rate) |
No ongoing interest — but the sold share is gone; you benefit from none of that portion's future growth |
| Effect on home ownership |
You retain 100% ownership throughout |
Ownership of the sold share transfers to the provider immediately |
| Effect on inheritance |
Remaining equity (after loan repayment) passes to your estate |
Only the unsold share of the property passes to your estate |
| Effect on benefits |
Released funds may affect means-tested benefits if held as cash |
Same — lump sum held as savings may affect means-tested entitlements |
| Flexibility / reversibility |
Can include drawdown, inheritance protection, and downsizing protection features |
Generally less flexible; selling a share is difficult to reverse |
| Who it suits |
Those who want to retain ownership, access flexible amounts, and keep options open |
Those who want certainty, no debt, and are comfortable with a permanent ownership transfer |
| Typical timeframe |
6–8 weeks from application to completion |
6–8 weeks; legal work around the ownership transfer can occasionally extend this slightly |
Understanding the cost structure of each plan type is one of the most important parts of making the right decision — because the two work very differently.
The compound nature of interest is the defining cost consideration for a lifetime mortgage. Over 10–15 years, the total owed can be substantially more than the original sum borrowed.
There is no interest with a home reversion plan — but the below-market-value sale is a significant upfront cost that is often underestimated.
To understand the full picture of what equity release costs across all plan types, see how equity release costs add up.
This is one of the most common questions we hear — and the honest answer is: it depends on the plan, the amount released, how long you live, and what happens to property values.
Here's how the two plan types compare on inheritance:
With a lifetime mortgage, the loan (plus rolled-up interest) is repaid from the sale of your property when you die or move into long-term care. Whatever equity remains after repayment passes to your estate. If you choose an Inheritance Protection Guarantee, you can ring-fence a fixed percentage of your property's future value for your beneficiaries — regardless of how much interest has accumulated.
With a home reversion plan, the inheritance impact is locked in at the point of sale. If you sell 50% of your property today, your estate will receive 50% of the eventual sale proceeds — no more, no less. There is no debt to repay, but there is also no possibility of the sold share benefiting your family.
Lifetime Mortgage |
Home Reversion Plan |
|
|---|---|---|
| How inheritance is affected |
Remaining equity after loan repayment |
Only the unsold share passes to your estate |
| Can you protect a portion for family? |
Yes — Inheritance Protection Guarantee available |
Yes — by selling less than 100% of the property |
| Is the impact fixed at outset? |
No — depends on interest accumulated and property value at repayment |
Yes — the share sold is fixed at the point of sale |
With hundreds of lifetime mortgage plans across multiple providers — and a smaller but important home reversion market — the right plan for you depends on far more than the headline rate or the amount you can release. It depends on your age, your property, your health, your family priorities, and what you want your financial future to look like.
That’s why independent, whole-of-market advice isn’t just helpful here — it’s essential.
A lifetime mortgage is likely to suit you if:
It may be less suitable if you plan to move to a significantly lower-value property in the near future, or if the long-term effect of compound interest on your estate is a concern that outweighs the benefits.
When comparing lifetime mortgage providers, the criteria that matter most are: fixed vs variable interest rate, whether a drawdown facility is available, ERC membership status, Inheritance Protection feature availability, and whether a downsizing protection clause is included. No two plans are identical — which is why whole-of-market advice matters.
If you’re weighing equity release against other options entirely, read our guide on whether equity release is the right choice for you.
A home reversion plan is likely to suit you if:
It may be less suitable if you’re younger (the below-market-value discount tends to be steeper for younger applicants), or if you’d like to retain the option to move or adjust your plan in the future.
Considering moving instead? Our comparison of downsizing vs equity release covers that decision in full.
These six questions are specifically about plan and provider selection — not about whether equity release is right for you in the first place. Use them as a checklist before you compare options.
Lifetime mortgage rates can be fixed for life or variable. A fixed rate gives certainty about how your loan will grow; a variable rate may start lower but can change. Which matters more to you?
A drawdown lifetime mortgage lets you take an initial amount and reserve further funds to access later — interest only accrues on what you’ve drawn. If your needs are likely to grow over time, drawdown can be significantly more cost-efficient.
ERC membership means the plan must include the No Negative Equity Guarantee and meet minimum consumer protection standards. Always confirm ERC membership before proceeding with any provider.
Not all lifetime mortgage plans offer an Inheritance Protection Guarantee. If leaving a defined share of your estate to family is important, confirm this feature is available — and understand exactly how it works — before choosing a plan.
Some lifetime mortgage plans include a downsizing protection clause, allowing you to repay the loan without an early repayment charge if you move to a lower-value property after a set period. If there’s any chance you might move in the future, this is worth prioritising.
Some advisers are tied to a panel of lenders; others access every provider in the UK market. A whole-of-market adviser sees all available plans — not just a corner of the market. This distinction can make a meaningful difference to the plan you end up with.
A lifetime mortgage is a loan secured against your home — you borrow money, interest rolls up, and the loan is repaid when you die or move into long-term care. You keep full ownership throughout. A home reversion plan works differently: you sell a share (or all) of your property to a provider in exchange for a lump sum or regular income, and retain the right to live there rent-free for life. The fundamental distinction is ownership: with a lifetime mortgage, you remain the homeowner and carry a debt; with a home reversion plan, you have sold a portion of the asset and carry no debt.
Lifetime mortgages account for the overwhelming majority of equity release plans taken out in the UK — typically over 95% of all new plans. Home reversion plans represent a small and specialist corner of the market, with fewer providers and stricter age requirements (usually 65+). This doesn’t make home reversion plans inferior — for the right person, they can be an excellent fit — but it does mean the range of available plans is narrower, and specialist advice is particularly important.
The No Negative Equity Guarantee is a specific protection standard set by the Equity Release Council, and it applies to lifetime mortgages from ERC member firms. It means you can never owe more than your home is worth at the time of sale — your family will never inherit a shortfall. Home reversion plans carry different protections: because you have already sold a share of the property, the lender’s risk structure is fundamentally different. The provider owns their share outright; there is no loan to exceed the property’s value. Both plan types, when arranged through ERC member firms, come with strong consumer protections — but the nature of those protections differs between products.
With a lifetime mortgage, the inheritance your family receives depends on how much equity remains after the loan and accumulated interest are repaid from the property sale. If property values have risen and the loan hasn’t grown too large, there may be meaningful equity left. An Inheritance Protection Guarantee can lock in a minimum share for your estate regardless of interest growth. With a home reversion plan, the inheritance impact is fixed at the point of sale: if you sell 40% of your property today, your estate will receive 40% of the eventual sale proceeds — no more. There is no debt to erode that figure, but there is also no upside if property values rise significantly after the sale.
Switching between plan types — for example, from a lifetime mortgage to a home reversion plan, or vice versa — is possible in principle but carries significant practical and financial implications. Moving away from a lifetime mortgage early may trigger early repayment charges, which can be substantial. Moving from a home reversion plan is more complex, as you have already transferred ownership of a share of your property. In most cases, switching is not straightforward and may not be cost-effective. If you’re considering a change, speak to a whole-of-market adviser who can model the full cost of switching against the potential benefit of a different plan structure.
When comparing providers — particularly within the lifetime mortgage market — the key criteria are: (1) Interest rate type — fixed rates give long-term certainty; variable rates may be lower initially but can change. (2) Drawdown availability — a drawdown facility means you only pay interest on what you’ve actually taken, which can significantly reduce the total cost over time. (3) ERC membership — confirms the No Negative Equity Guarantee and minimum consumer protection standards apply. (4) Inheritance Protection feature — not all plans include this; if protecting your estate matters, confirm it’s available. (5) Downsizing protection clause — allows penalty-free repayment if you move to a lower-value property after a qualifying period. (6) Early repayment charge structure — understand what it would cost to exit the plan early, and under what circumstances charges are waived.
Yes — and the reason goes beyond the legal requirement. FCA regulation means equity release can only be recommended by a qualified, authorised adviser. But the practical reason is just as important: the equity release market contains dozens of plans across multiple providers, with meaningful differences in rates, features, and protections. A whole-of-market adviser — one who isn’t tied to a panel or a preferred lender — can compare every available plan and identify the one that best fits your specific circumstances. An adviser who only accesses part of the market may never show you a plan that would have been significantly better for you. Speak to an equity release adviser at Access Equity Release and we’ll compare the full market on your behalf — at your pace, with zero pressure, and with no advice fee unless you proceed.
— the complete plain-English guide
— mechanics, interest, and lender rules explained
— every cost, clearly explained
— a balanced view across all scenarios
— every other option, side by side
— inheritance, estate planning, and family conversations
— which route suits which situation
— whole-of-market, FCA-regulated, no obligation
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