Equity Release Interest: What It Costs and How to Avoid Overpaying

When you take money out of your home through equity release, a financial option for homeowners aged 55+ that lets you access cash tied up in your property without selling. Also known as reverse mortgage, it’s a tool used by tens of thousands in the UK to fund retirement, home repairs, or help family—but the interest rate, the cost you pay to borrow the money, which compounds over time and can grow faster than expected is where most people get caught off guard.

Unlike a regular loan, equity release interest doesn’t just add up—it grows on itself. That means if you don’t pay anything back, the interest keeps rolling into the total debt. A 5% rate might sound low, but over 10 years, it can more than double what you originally borrowed. And if you’re 70 or older, you might qualify for more cash upfront, but the interest rate, the cost you pay to borrow the money, which compounds over time and can grow faster than expected often comes with higher fees and fewer protections. Many don’t realize that the home equity loan, a loan secured by your home’s value, typically with fixed payments and a set term works differently than a reverse mortgage, a type of equity release where no monthly payments are required, but interest accumulates until the home is sold or the owner passes away. One has payments you control; the other lets debt grow silently.

What affects your rate? Your age, your home’s value, your health, and even your location. Older homeowners often get better rates because lenders expect to wait less time before getting repaid. If you have certain medical conditions, you might qualify for an enhanced rate—meaning more cash or lower interest. But if you’re tempted by the lowest advertised rate, check the fine print: is it fixed or variable? Are there early repayment penalties? Can you make partial payments without fees? These details matter more than the headline number.

Most people who regret equity release didn’t get ripped off—they just didn’t know how the interest would grow. One woman in her early 70s took out £80,000 at 5.2% interest. Ten years later, the debt was £130,000. She never missed a payment, but she didn’t know she didn’t have to make any. That’s the trap. The system is legal. The problem is the lack of clarity.

Below, you’ll find real guides that break down how much you can actually borrow, what the limits are, how interest stacks up over time, and which options might actually save you money. No fluff. No sales pitches. Just what works—and what doesn’t—when it comes to getting cash from your home without losing control of your future.