Getting a foot on the property ladder is harder than ever for many young people. With rising house prices, stricter mortgage rules, and the need for large deposits, more parents are looking for ways to give their children a helping hand. One option growing in popularity is equity release.

Equity release allows homeowners aged 55 and over to unlock tax-free cash from their home without having to move. For many, it offers a practical and flexible way to support loved ones when they need it most.

Why Parents Are Choosing Equity Release

Parents and grandparents often want to help their children now—when they’re saving for a deposit or trying to secure a mortgage—not just through inheritance later in life. Equity release makes this possible, by allowing you to release money from the value of your home while you continue living in it.

The funds can be used however you wish, including gifting money to children or grandchildren to help them:

• Pay a house deposit
• Cover legal or moving costs
• Meet mortgage affordability requirements
• Buy a first home sooner than planned

How It Works

The most common type of equity release is a lifetime mortgage. You borrow a lump sum secured against your home, but you still retain full ownership and don’t need to make any monthly repayments unless you choose to.

The loan, plus interest, is typically repaid from the sale of your home when you pass away or move into long-term care. Many modern plans now offer the option to make voluntary interest payments, helping you manage the total cost and preserve more of your estate.

Example: Gifting with Equity Release

Imagine you’re 68 and own your home outright, currently valued at £300,000. You want to give your daughter £40,000 to help her with a deposit. Through equity release, you take a lump sum lifetime mortgage for that amount.

You continue living in your home, and your daughter can move into her own place sooner—something that might have taken her years to save for alone.

Things to Consider Before Gifting

While using equity release to help your children is generous and increasingly common, there are some important factors to think about:

• It reduces the value of your estate – this could impact what’s left for your beneficiaries later on.
• It may affect your tax position – gifting large sums may be subject to inheritance tax rules if you pass away within 7 years of gifting the money.
• It could impact benefits – releasing equity may affect your eligibility for means-tested state benefits.

What Are the Protections in Place?

Equity release in the UK is a regulated financial product. If you use a provider who is a member of the Equity Release Council, you benefit from key safeguards including:

• No negative equity guarantee – you’ll never owe more than your home is worth
• The right to stay in your home for life
• Clear terms and interest rates

It’s also a legal requirement to receive professional financial advice before taking out a plan, ensuring the option is suitable for your needs.

Is It the Right Option for You?

Helping a loved one buy their first home can be an incredibly rewarding use of equity release. But it’s not right for everyone. It’s important to discuss your situation with a qualified adviser who can explore your goals, outline the pros and cons, and make sure you’re making a well-informed decision.

You should also speak with your family about your plans. Equity release may affect future inheritance, and open conversations help manage expectations and avoid surprises later on.

Next Steps

If you’re considering using equity release to support your children, start by getting a personalised quote or speaking with an FCA-regulated equity release adviser.

Get an Equity Release Estimate

Helping your children with a home of their own might be more achievable than you think with the right advice and the right plan in place.