Equity release
What to know before unlocking equity from your home
Equity release lets you access some of your home’s value without selling or moving out, usually through a lifetime mortgage or a home reversion scheme. This page explains how these products work, who they suit, the risks involved and what fees, conditions and long‑term impacts to consider before applying, including effects on inheritance, future care needs and state benefits.
Always get independent legal and financial advice before making a decision, check that your provider is regulated by the Central Bank of Ireland, and carefully review the provider’s terms and conditions for details on eligibility and consumer protections. Consider how equity release could impact your beneficiaries and future needs before applying.
What is equity release and how does it work?
Equity is the difference between your home’s current value and any outstanding mortgage. For example, if your home is worth €400,000 and you owe €100,000, your equity is €300,000.
Most equity release schemes in Ireland require you to own your home outright, meaning you have no mortgage remaining. These schemes let you access some of your home’s value, usually if you have reached a certain age, for example 60.
Equity release is different from topping up or increasing your mortgage. Eligibility criteria may vary depending on the provider and product.
Why might you use equity release?
Equity release may suit you if you need a lump sum or regular income for retirement, don’t want to sell your home, and aren’t concerned about passing on its full value to your family. It’s not suitable for risky investments, as returns may not cover the cost of the scheme.
If you’re considering equity release to pay for nursing home care, first, look into the Health Service Executive (HSE) Nursing Home Support Scheme, also known as the Fair Deal Scheme, and other state supports. Read the CCPC page on nursing home care.
You may want to consider alternatives for retirement income, such as downsizing. Speak to a financial adviser to get a clear picture of your options.
What alternatives to equity release exist in Ireland?- Consider trading down to a smaller property to release equity at a lower cost. This can reduce your living expenses and free up cash. Go to the CCPC page on selling a house.
- Rent out a room in your home for tax-free income. The Rent-a-Room Relief scheme allows you to earn up to €14,000 a year tax-free. Visit Revenue for more.
- Get budgeting advice and support from MABS, the Money Advice and Budgeting Service, for help managing your finances and accessing all relevant state supports.
- Explore state-funded home improvement schemes, such as the Income supports for older people and SEAI energy grants, to help with essential repairs or improve energy efficiency.
- Apply for small loans like the It Makes Sense Loan from credit unions, which offers affordable credit to people in receipt of state benefits.
- Ask adult children living at home to contribute to household costs, including bills, food and upkeep, to help manage expenses.
What types of equity release schemes are available?
Equity release schemes are not widely available in Ireland so check with providers for current options. Only a small number of them offer equity release schemes. Always check that your provider is regulated by the Central Bank and meets the Consumer Protection Code.
Main types include:
- Lifetime mortgages: Borrow money against your home’s value, with options for roll-up or interest-only repayments. Roll-up payments mean that interest is added to the loan and compounded over time, with the total amount repaid in one lump sum when the property is sold.
- Home reversion schemes: Sell a share of your home for a lump sum, continuing to live there for life.
What are the risks and alternatives?
Equity release is a major decision. Risks include needing equity later for care, reducing inheritance, and possible forced sale if you move out for more than six months. Alternatives include selling your home and moving, getting a different type of mortgage, renting out rooms, or transferring ownership to a family member.
What fees and charges apply?
You may pay:
- Valuation fees (independent valuation recommended)
- Legal fees and costs
- Fees for independent advice
- Administration fees
Some providers offer fixed set-up fees, usually between €1,500 and €3,000. Fees paid through a lifetime mortgage may accrue interest. Make sure to check the terms and conditions of the loan to be clear on this feature, as some providers could require fees to be paid upfront rather than rolled into the loan.
What maintenance and insurance requirements exist?
You must keep your home in good repair and insure it, noting the lender’s interest. Maintenance costs can be high, and providers may restrict certain renovations.
Can your home be sold against your wishes?
Your lender may require sale if you move out for six months or more, fail to insure your home, or don’t maintain it to their standard.
What issues should you consider with equity release?
Ask about:
- Impact on state benefits and pensions
- Transferability to another property
- Rights of cohabitants or dependents
- Fees, charges, and penalties
- Effect on beneficiaries and inheritance
- Long-term financial needs
- Complaint procedures
If you have a complaint, contact the Financial Services and Pensions Ombudsman.
How do home reversion schemes work?
You sell a share of your home for a lump sum, usually less than market value. Companies may buy up to 70% of your home, and you continue to live there. Examples:
- Mary, 66: Sells 50% of her home, lives there for 15 years, and on sale, 50% goes to the company, 50% to her estate.
- Tom, 64: Sells 40%, lives there for 10 years, then sells the home to fund assisted living. 40% goes to the company, 60% to Tom.
What types of contracts are available?
- Fixed share contracts: Lump sum for a fixed share, with or without monthly repayments.
- Variable share contracts: Not currently available in Ireland; company’s share increases over time.
How much could you get from selling a share?
You get less than market value, as companies wait years to cash in. Older sellers receive more, based on life expectancy.
When does a home reversion scheme end?
It ends when you sell your home, move out permanently, or die.
Can you cancel a home reversion contract?
You cannot reverse the sale, but you may negotiate to buy back the share or sell your home with the company’s agreement.
What are the pros and cons of home reversion?
Pros:
- Raise cash and continue living in your home
- No rent or repayments (unless monthly repayment option chosen)
- Benefit from pre-sale property prices
- No interest charged
- Fixed share ownership
Cons:
- Receive less than market value for your share
- Reduced inheritance for beneficiaries
- Set-up costs can be high
- May affect entitlement to state benefits
How do lifetime mortgages work?
Types:
- Roll-up mortgages: No repayments; interest compounds monthly.
- Interest-only mortgages: Pay interest monthly; amount owed stays the same.
Example roll-up mortgage growth:
Amount borrowed | 15 years | 20 years | 25 years |
|---|---|---|---|
| €50,000 | €122,785 | €165,645 | €223,467 |
| €100,000 | €245,570 | €331,291 | €446,934 |
| €150,000 | €368,354 | €496,936 | €670,401 |
Interest-only mortgage example:
| Rate | Monthly interest on €100,000 loan |
|---|---|
| 7.85% variable | €654.17 |
| 8.1% fixed | €675 |
| 8.4% fixed | €700 |
How much can you borrow?
- Roll-up (lifetime) mortgage: Typically, 15% to 45% of your home’s value, depending on your age – up to a maximum limit (e.g., €500,000).
- Interest-only mortgage: There’s no fixed €30,000 cap. Borrowing is usually based on income multiples and property value under Central Bank rules – amount varies by lender and borrower type.
When is the mortgage paid off?
When you sell your home, move out permanently, or die. Some must be repaid within 30 years.
What can you do with the money?
You can use the funds as you wish but only borrow what you need. Avoid using lifetime mortgages for investments.
Can you cancel a lifetime mortgage?
Yes, by selling your home or paying off the loan. Early repayment fees may apply for fixed rates.
What if you owe more than your home is worth?
A ‘no negative equity’ guarantee means you or your estate will never owe more than the sale proceeds.
Does the lender own part of your home?
No, you remain the legal owner, but the lender has a ‘first charge’ to recover the loan from sale proceeds.
What are the advantages and disadvantages of lifetime mortgages?
When considering a lifetime mortgage, it’s important to understand both the potential benefits and the drawbacks before deciding if it’s the right option for you.
Advantages
- Raise cash and continue living in your home
- Benefit from property value increases
- Take loan in instalments to reduce interest
- Providers must meet consumer credit law
Disadvantages
- Interest builds up quickly with roll-up mortgages
- Large repayment may leave little for care or inheritance
- Additional charges for instalments
- Higher interest rates than standard mortgages
