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Equity Release Gifting Options For Your Friends And Family

equity release gifting

Gifting equity through an equity release product can be a great way to provide financial assistance to family members aged 55 or older.

Equity release gifting allows individuals to access tax-free cash from their homes while also helping younger generations pay off their mortgages up to 12 and a half years sooner.

It can be any amount you choose, but it generally has to be at least 50% of what’s left on your mortgage balance after deductions.

Equity release gifting is also beneficial for inheritance tax purposes, as gifts made three to seven years before death are not subject to inheritance tax.

Benefits Of Our Services:

  • Release equity from your home as a cash sum or via regular payments
  • Exclusive rates and offerings from the top equity release providers
  • Release money for repairs or home improvements like a new kitchen or bathroom.
  • Help a family member purchase their first home.
  • Pay off all your credit cards and loans and have zero monthly payments.
  • Switch to a better lifestyle, change your car or have a well-deserved holiday.
  • 100% independent, securing you quotes from the UK’s leading equity release companies.

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Find The Right Equity Release Deal – Rates From 4.91% For 55 And Over.

For those aged 55 and over, there’s a great chance to provide more stability and security both to their finances and those of their loved ones.

Equity release schemes enable individuals to tap into the wealth stored in their homes, providing them with cash when needed.

Although the UK economy is experiencing disruption, hundreds of equity release plans remain available, offering competitive interest rates, favourable loan-to-value ratios, and long-term security.

Suppose you’re worried about how equity release might affect your future beneficiaries. In that case, you can use inheritance protection to guarantee a particular portion of your property’s value will be passed on when you die. No matter how much money has been released against the property, this percentage remains untouched.

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2026 is seeing substantial growth in the equity release market. And an average of 25% of homeowners over 55 choose equity release gifting as their primary reason for releasing the cash tied up in their properties.

Over 60% of homeowners cited home improvements as the primary motivator for choosing equity release; however, many are opting to tap into their property wealth to assist friends and family with their finances.

Equity release gifting to the family is becoming a more popular choice for many Grandparents choosing to help their Grandkids pay for university fees with equity release or paying for significant life events, including weddings, first-time home buyer deposits, clearing credit card debts and loans, with some opting to spend on travel with their loved ones to enjoy some quality time together.

With family finances under strain, equity release gifting has become a significant driver for homeowners aged 55 and over to tap into their property wealth. To release some cash and pass on an advance in inheritance, which is increasingly becoming known as a living inheritance.

gifting money from equity release

By using equity release, Grandparents can see their wealth put to good use while they’re around to see their loved ones enjoy a better quality of life with less financial stress.

Statistics for 2026 show that the total amount of equity released reached an all-time high, with an average of £10 million paid out to homeowners through equity release daily.

The average lump-sum tax-free release was £76,500. The most popular type of plan was drawdown, which contributed to two-thirds of all equity release loans approved. 15% of those were enhanced drawdown lifetime mortgages, which offer a higher LTV to homeowners aged 55+ with existing health conditions.

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Specialist Advice Is Key To Equity Release Gifting For Friends and Family

With the significant increase in equity release gifting, it’s imperative that homeowners eligible for this type of finance know how to use it to maximise value and minimise risk.

Due to a significant increase in interest from eligible joint homeowners, more lenders are entering the equity release market, driving competition and making it a more feasible financing option for those looking to use their property wealth to gift to relatives.

Or perhaps extend a financial hand to a close friend to help reduce their debts, or, more commonly, for seniors to finance business investments or enter into a partnership, as most standard loans are restrictive on how borrowed money is used.

The majority of standard lenders are unwilling to approve loans for commercial investments. With equity release, gifting is more popular among investors as the money released is yours to spend as you please.

That being said, if you are considering equity release for any reason, be it to help your Grandkids reduce student debt, get on the property ladder, treat your family to a holiday, yourself to home improvements, or even to age-proof your home so you can live there for the rest of your life, you do need specialist financial advice to be sure that equity release is proper for you.

If so, you need to find the most appropriate equity release product for your financial circumstances. The average customer suited to equity release has 100% home equity and a property with a market value of at least £70,000.

The Types of Equity Release that May be Suited to Gifting

Equity release isn’t a one-size-fits-all financial product. Various equity release plan providers offer different types of plans with varying degrees of flexibility.

The most common is the lifetime mortgage, with the vast majority choosing a drawdown. This allows them to draw on an initial lump-sum payment, leaving the rest available in reserve to borrow as needed later in life.

A home reversion plan is an alternative type of equity release that your financial advisor will discuss. However, most will not recommend it as a viable option unless you have particular circumstances, such as no plans to leave an inheritance to anyone. A home reversion plan involves selling a percentage or all of your home equity to a plan provider for 60% or less of your home’s market value.

Home reversion plans account for only around 1% of the equity release market.

Lifetime Mortgages Taken as a Lump Sum Tax-Free Payment

It is possible to take all the available equity a plan provider may approve you for as one lump sum using interest roll-up, which would require no monthly payments on the loan amount you’re approved for. Instead, compound interest is applied to the total loan amount repaid upon selling your property, once both residents have passed or moved into a long-term care facility.

This approach incurs the highest cost, as interest is applied to the funds from the date of release. This is partly why more people are choosing drawdown.

Drawdown Lifetime Mortgage

With a drawdown lifetime mortgage, only the funds released attract interest. The additional funding left on reserve for future borrowing is an advanced approval that you can use at your leisure without incurring interest charges. By using drawdown, a lump sum can be released initially, with surplus equity from your property wealth left on reserve to use as needed or to boost your annual retirement income.

This option is handy for those who need a cash boost to gift equity to relatives financially, while keeping some funds available for personal use. Or to afford further gifts, such as when your Grandchildren are getting married, a newborn arrives in the family, or any other expensive life event.

Additionally, it’s beneficial to have some funds on reserve that you can call on should you need emergency care funding, home adaptations, or perhaps an expensive home repair, as it’s generally more challenging to be approved for standard loans when you’re in retirement.

Flexible Lifetime Mortgages

Flexible lifetime mortgages are an attractive option for seniors who want to use equity release gifting while helping control the loan’s interest costs to protect some of their family’s inheritance.

With this option, you can pay some or all of the interest the lifetime mortgage accrues each month, with the option to revert it to interest roll-up should you begin to experience difficulty keeping up with the monthly interest payment. An alternative is an interest-only lifetime mortgage, which requires a commitment to make monthly interest payments on the loan approved.

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Top Considerations For Equity Release Gifting

Equity release is a lifetime commitment, and due to the potential risk, you need to discuss things with an FCA-authorised financial advisor to ensure you’re suited to this type of finance. If you’re primarily using a lifetime mortgage for gifting money to your loved ones, you’ll need to know you’re financially covered for unexpected life events.

Life has a habit of throwing a curveball at the most inconvenient times. Your property wealth may be needed to boost your retirement income later in life, or you may need to use some of your capital tied up in investments, savings or your property to finance your care needs in your senior years.

People, on average, are living significantly longer than they did in the past. Sometimes decades longer. Some seniors today are finding that their pension plans haven’t performed as expected. Or they’re living to an unexpected age that wasn’t financially planned for, which reduces their retirement income and leaves them reliant on products like equity release to boost their income.

For those releasing equity from property wealth at a younger age, closer to 55 years old, you’ll want to consider long-term care costs before releasing a lump sum so you know there’s some surplus cash available should the need arise.

One of the most important factors is a Santander lifetime mortgage for the rest of your life. Plan providers can apply for an Early Repayment Charge (ERC) to repay the loan early. These can be as high as 25% of your loan value.

Lenders will waive the ERCs under certain scenarios, including when you need to downsize your home (known as downsizing protection) or when your partner passes or moves into long-term care. You need to move to a smaller property that you can manage independently.

Reviewing the terms and conditions with your financial advisor before applying for equity release is essential. It’s one reason the FCA requires applicants to receive impartial advice from a financial advisor before applying for equity release, as there can be substantial costs if you choose an inappropriate plan.

Equity release will often affect any means-tested benefits, including Pension Credits. Your financial advisor will be able to go through your income, expenses and investment portfolio where applicable and determine how much benefits you’d be entitled to and the impact equity release would have on your available capital savings that could affect those state benefits.

The total value of benefits packages isn’t limited to a top-up on your weekly income.

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There are annual home energy grants such as the Warm Home Discount scheme, vouchers for prescription glasses; some prescription costs can be covered, help with dental care and funding available for pensioners requiring a gas boiler repair to keep their home heated.

Related To This Subject:

How Can I Release Money From My House in 2026

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Steve Case
Author: Steve Case – Mortgage and Loans Expert
Alise Brown
Reviewed & Fact Checked By: Alise Brown