By Tom Philips at January 1, 2025

Can I Gift the Cash from Equity Release?

Yes, if you opt for equity release then you are able to gift the money you receive to your loved ones and friends and family.

Lots of people leave their inheritance to their loved ones but aren’t around to see their loved ones actually enjoy the money that they receive.

This is why equity release is a great alternative, as you get to watch your loved ones enjoy the money you’ve given them.

How does gifting equity release work?

Equity release is a method of accessing your cash from the current value of your home, without having to move out.

It’s a special type of mortgage that gives you the cash tied up in the value of your property [1]. You can receive this as either one lump sum or a series of smaller, regular payments.

There aren’t any restrictions on how you can use this cash, most people tend to use it for paying off an existing mortgage, putting the cash towards retirement plans, making home improvements, or financially supporting children with a wedding or education – the choice is completely yours to make.

A lot of people who opt for equity release do opt to help their loved ones, as you get to watch your loved ones enjoy the money you’ve given to them, as opposed to leaving inheritance for them.

Equity release comes in different methods. But the most common type of equity release plans are lifetime mortgages and home reversion plans.

Both of these plans are regulated by the Financial Conduct Authority, the watchdog that oversees equity release regulation.

It’s important that you think long and hard before going down the equity release route.

The best place to start is by speaking with an equity release specialist to understand what it involves and the terms and conditions of any plan.

Like all financial arrangements, equity release can come with some risk.

The amount you can access is likely to depend on your age and the value of your home, so you will need to make sure that you can afford the repayment plan put in place, like any other mortgage.

Please call our 24-Hour Helpline for the Best Equity Release Companies & Interest Rates: 0330 058 1579

What are the risks of gifting money from equity release?

Like any other type of mortgage, the biggest risk of equity release is being able to afford the monthly repayments.

The equity released to you as cash is dependent on you being able to repay the amount back to the equity release provider [2].

Similarly, giving the cash from equity release as a gift to your family to support weddings, education, or kids getting on the property ladder themselves could be problematic if you then need the cash yourself in the future.

Plus, if you’re in receipt of means-tested benefits then you will need to check if equity release impacts your ability to continue making a claim.

Many people use equity release as a way of passing on an inheritance to their children whilst they are still alive, also known as a ‘living inheritance’.

This is a great way to use your equity release if you want to be able to financially support your family earlier in their lives rather than waiting for tragedy to strike.

However, you must consider that this will mean the inheritance left when the time does eventually come will be less due to the outstanding mortgage amount.

To help protect your beneficiaries, most equity release providers offer a no negative equity guarantee.

This makes sure your loved ones won’t have to pay back more than your home can be sold for, even if the sale doesn’t fully cover the amount you owe.

Please call our 24-Hour Helpline for the Best Equity Release Companies & Interest Rates: 0330 058 1579

What are the potential benefits of gifting equity release?

Flexibility is the biggest benefit for gifting equity release.

Many people don’t want to have to wait until they die to be able to support their family with major financial support, like buying a house, going through education, or even just buying a first car.

Equity release means you can be there to see the effect your cash is having on their lives [3].

With a lifetime mortgage, you can receive a cash lump sum when you take out an equity release plan.

Alternatively, you can choose to set-up a cash reserve facility with some equity release lenders, which you can take funds from later.

Please call our 24-Hour Helpline for the Best Equity Release Companies & Interest Rates: 0330 058 1579

Do I have to pay tax on equity release?

Here is the good news – the cash you received from equity release is tax free.

You are exempt from both income tax and capital gains tax. All the cash you receive is yours to spend however you wish.

If you gift the money you receive from equity release to a family member or someone else you wish to gift the cash to, and you live for at least seven years afterwards, you will also be exempt from inheritance tax on that amount.

If you do die within seven years of making the gift, then the recipient may have to pay inheritance tax on the gift amount.

The amount of tax is dependent on a number of factors, including the total value of your estate.

If you wish to learn more about inheritance tax and equity release, then please discuss this with a financial advisor before taking out an equity release plan.

Please call our 24-Hour Helpline for the Best Equity Release Companies & Interest Rates: 0330 058 1579

What are the different scenarios where people might need a gifted deposit?

You can take out equity release to use the cash from your property to gift to someone to use as either all or part of their house deposit.

This is particularly common amongst those 55 years or older who have children in their twenties and thirties who are struggling to save that initial deposit to get on the housing ladder themselves.

Many people, especially those in cities, are struggling to save for a deposit due to the current cost of living crisis.

They might have a high enough level of income to be able to afford the monthly repayments, but they don’t have the savings needed for the deposit.

They might also need a larger deposit to get access to better mortgage rates.

Many mortgage providers offer the best rates to those who can provide at least a 20 per cent deposit.

For some, this might be unattainable, and a gift is the only way they can reach it.

Others might be going through a divorce, and one party might either need help securing their own property or help in buying out the other party from the house.

Mortgage interest rates are some of the highest rates we have seen in the UK for more than a decade.

Some clients are using equity release to gift funds to a family member struggling with the rising costs.

Speak to Equity Release Warehouse

If you are interested in releasing equity from your home and using that money to help family, friends and loved ones, then speak to a member of the Equity Release Warehouse team for more help and support.

Our team of specialists are on hand to offer you help and support with all thing’s equity release.

Our team will never put any pressure on you to release equity, and we will only ever provide you with the information you need to make an informed decision.

We’ll even use our very own equity release calculator to work out how much you might be able to release, and therefore how much you might be able to gift to family and friends.

To speak to a member of our team today, start your equity release journey by calling us on 0330 058 1579 or by visiting us online by searching for www.equityreleasewarehouse.com.