Comparison · Equity Release · 2026
Home Reversion Plan vs Lifetime Mortgage UK 2026: Equity Release Types Compared
Equity release is not a single product — it is a category with two distinct legal structures. A lifetime mortgage keeps you as full owner and works like a loan with rolled-up interest. A home reversion plan involves selling a share of your home outright today for a discounted lump sum, while keeping a rent-free right to live there for life. This guide compares both for homeowners considering releasing equity in 2026.
TL;DR - 30-Second Summary
- - Lifetime mortgage: loan secured on your home, you keep 100% ownership, interest rolls up, no negative equity guarantee, minimum age 55
- - Home reversion: sell a share of your home now (often at a discount to market value), rent-free lease for life, minimum age usually 60–65
- - Lifetime mortgages account for the large majority of new UK equity release business
- - Reversion can occasionally suit very elderly or impaired-life applicants seeking maximum cash today
Side by Side
| Feature | Lifetime Mortgage | Home Reversion Plan |
|---|---|---|
| Ownership | You keep 100% | You sell a share outright |
| Minimum age | Usually 55 | Usually 60–65 |
| How debt/sale works | Interest rolls up on the loan | No debt — share already sold |
| Cash released vs value | Typically 20–55% loan-to-value | Often 20–60% of true value for the share sold |
| No Negative Equity Guarantee | Yes (Equity Release Council members) | Not applicable — no loan to exceed value |
| Market share | Large majority of new plans | Small niche |
| Right to remain rent-free | Yes, as owner | Yes, via lifetime lease |
| Regulator | Both are FCA-regulated activities | |
How Each Type Actually Works
A lifetime mortgage is the more familiar structure: it behaves like a mortgage, except there are usually no mandatory monthly repayments. Interest compounds on the balance unless you choose an interest-serviced or payment-flexible plan, and the loan (plus rolled-up interest) is only repaid when the last borrower dies or moves into permanent long-term care. A drawdown lifetime mortgage lets you take an initial amount and reserve the rest to draw down later, only accruing interest on cash actually withdrawn.
A home reversion planworks differently: the provider buys a percentage of your home outright — anywhere from a small share to the whole property — for a lump sum that is deliberately below open-market value for that share, because the provider also grants you a lease allowing you to live there rent-free for the rest of your life. Because there is no loan, there is no interest to roll up, but the share sold is gone permanently, regardless of how much the property appreciates afterwards.
Who Should Consider Each Option
- - You want to keep full ownership of your home
- - You are aged 55–70 and want maximum flexibility
- - You want the No Negative Equity Guarantee
- - You may want to leave a share of the property to your estate
- - You are older (often 65+) and want a larger lump sum today
- - You do not want a debt that compounds over time
- - You have health conditions that may reduce life expectancy (impaired-life terms)
- - You have compared both and reversion offers materially more cash for your circumstances
Verdict
For most homeowners considering equity release in 2026, a lifetime mortgage from an Equity Release Council member remains the default choice — it keeps you as owner, offers the No Negative Equity Guarantee, and drawdown flexibility usually beats the discounted lump sum offered by reversion.
Home reversion is a narrow niche product best suited to older applicants who have taken independent financial and legal advice and confirmed it genuinely offers more value for their specific circumstances. Both routes are irreversible or costly to unwind, so independent legal advice (a mandatory requirement) and whole-of-market financial advice are essential before proceeding.