Equity Release and Your Estate: What Happens to Your Home

Last checked: 2 November 2026

With a lifetime mortgage, the home stays in the borrower's name, and nothing has to be repaid while the borrower lives there. When the last borrower dies or moves permanently into long-term care, the home is normally sold and the loan, plus all the interest added to it, is repaid from the sale. Whatever is left after that goes to the estate. Under Equity Release Council standards, the amount owed can never be more than the value of the home when it is sold, after reasonable sale costs. This guide explains each step in plain words, and what a lifetime mortgage means for the people who inherit. For the basics, see how equity release works.

The home while the borrower lives there

A lifetime mortgage is a loan secured on the home the borrower owns and lives in, for UK homeowners aged 55 and over. The borrower keeps ownership of the home with a lifetime mortgage. No monthly payments are required: interest is added to the loan instead.

Under Equity Release Council standards, customers have the right to stay in their home with a lifetime mortgage for the rest of their life, or until they move permanently into care, as long as it remains their main residence and the loan terms are kept (Equity Release Council product standards).

What sets off the repayment

The loan becomes due when the last borrower either dies or moves permanently into long-term care. For a couple with a lifetime mortgage in joint names, this means the second of the two. If one partner dies or moves into care, the other can carry on living in the home and the loan simply continues.

A partner or relative who lives in the home but is not named as a borrower does not have the same right to stay once the last named borrower has died or moved into care.

When the last borrower dies

When the last borrower dies, the people dealing with the estate (the executors, or administrators where there is no will) let the lender know. The home is then normally sold, and the money from the sale goes first to repaying the lifetime mortgage.

The amount repaid is the original loan, any further amounts taken through drawdown, and all the interest added to them, less anything the borrower paid back along the way. Any fees that were added to the loan are included too. After that is repaid, whatever is left from the sale goes into the estate and is shared out under the will or the rules of intestacy.

The family does not have to sell the home if they would rather keep it. The loan can instead be repaid from other money, for example savings in the estate. The lender is repaid either way.

When the last borrower moves into long-term care

A permanent move into long-term care also brings the loan to an end. The home is normally sold and the loan repaid from the sale, in the same way as after a death.

Under Equity Release Council standards, any early repayment charge is waived when a customer moves permanently into long-term care, once a medical practitioner's certificate is provided and the loan terms have been kept (Equity Release Council product standards).

What remains after the loan is repaid belongs to the borrower, not the estate, because the borrower is still alive. That money can then count towards paying for care, since care funding looks at the person's capital.

The no negative equity feature

Because interest rolls up over time, the amount owed can grow large. Lifetime mortgages from Equity Release Council members include a "no negative equity" feature. It means the borrower, or their estate, will never owe more than the value of the home when it is sold, after reasonable sale costs. This applies as long as the home is sold for the full price that can reasonably be obtained and the terms of the loan have been kept (Equity Release Council product standards).

In practice, if the debt has grown to more than the sale price, the lender accepts the sale proceeds (after reasonable costs) and the rest of the debt is written off. The family is not asked to make up the difference. It also means the estate can be left with nothing from the home, if the loan has grown to the whole of its value.

How a lifetime mortgage affects the inheritance

A lifetime mortgage reduces what is left from the home. The table shows how the pieces fit together when the home is sold.

The longer the loan runs and the more is taken, the more interest builds up and the less is left. Some things reduce how much builds up:

• Taking less: borrowers do not have to take the full amount on offer.
• Drawdown: with a drawdown lifetime mortgage, interest is only charged on money actually taken.
• Voluntary repayments: under Equity Release Council standards, customers can make repayments without any charges, subject to the provider's lending criteria.

Inheritance Tax and the estate

For Inheritance Tax, the estate is valued after debts are taken off. gov.uk explains that debts such as a mortgage are deducted to give the net value of the estate (gov.uk: report the value of the estate). A lifetime mortgage is a loan secured on the home, so it reduces the value of what is left.

The standard Inheritance Tax threshold is £325,000. There is normally no Inheritance Tax to pay if the estate is below the threshold, or if everything above it goes to a spouse, civil partner, charity or community amateur sports club. The threshold can be higher when the home is given to children or grandchildren (gov.uk: Inheritance Tax).

Protecting part of the home for family

Some lifetime mortgages offer inheritance protection. The borrower sets aside a share of the home's value, for example a set percentage, which cannot be borrowed against. When the home is sold, that share is kept back for the estate, whatever has happened to the loan.

Protecting a share means less money can be released at the start, because the lender can only lend against the rest of the home's value. See how much equity can be released for the other factors that decide the amount.

Talking to family

Many people involve their family when thinking about a lifetime mortgage, so that those who may inherit the home know what is planned. Under Equity Release Council standards, every customer must use their own independent solicitor, who explains the legal side of the plan and the customer's rights and duties (Equity Release Council).

MoneyHelper, the free government-backed money guidance service, has more information on lifetime mortgages.

What happens after an enquiry

No quote is shown on this site. After an enquiry is sent, the visitor receives a phone call and an email from an equity release broker. The broker discusses whether a lifetime mortgage is suitable for the visitor's individual circumstances, and the broker will advise on any wish to protect part of the home's value for family.

Key points

• Lifetime mortgages are only for UK homeowners aged 55 and over.
• The loan is normally repaid from the sale of the home when the last borrower dies or moves permanently into long-term care.
• For couples, the loan continues until the second borrower dies or moves into care.
• Under Equity Release Council standards, the amount owed is never more than the value of the home when it is sold, after reasonable sale costs.
• Interest rolls up, so the longer the loan runs, the less is left for the estate.
• Inheritance protection keeps back a share of the home's value, but means less can be released at the start.