Equity Release and Benefits
If you receive means-tested benefits, releasing equity from your property creates capital - and capital can affect entitlement to those benefits.
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What happens next
- Fill in the form (2 minutes).
- We'll match you with the right specialist for your situation.
- A specialist independent broker will contact you to discuss your options.
Important: Equity release is a long-term commitment and will reduce the value of your estate. It may affect entitlement to means-tested benefits. Independent financial and legal advice is required. The specialist brokers we work with source plans from Equity Release Council approved lenders. Your home may be repossessed if you do not maintain required payments on a secured loan.
About Equity Release and Benefits
This is one of the most important considerations before taking equity release. We introduce you to equity release specialists who are qualified to advise you, and who will consider your benefits position before any recommendation - in many cases, a drawdown plan or careful timing can minimise the impact.
The options available
Pension Credit and Equity Release
Pension Credit has a capital threshold - if your savings and capital (including equity release proceeds held as cash) exceed £10,000, Pension Credit is reduced. Above £16,000, entitlement ends. A lump sum release of £20,000 held in a bank account could eliminate Pension Credit entirely until it is spent.
Council Tax Reduction
Council Tax Reduction (formerly Council Tax Benefit) is means-tested. Releasing equity that is then held as cash may affect entitlement, depending on the level of capital and local authority rules.
Housing Benefit
Housing Benefit is means-tested. Capital from equity release held in a bank account is counted as savings for Housing Benefit purposes - above £6,000 (for working-age claimants) or £10,000 (for pension-age claimants), the benefit is reduced.
Drawdown to Manage Benefit Impact
A drawdown lifetime mortgage limits the impact - you draw only what is needed for an immediate purpose, spend it quickly, and hold no large cash balance. This is the most effective structure for benefits-sensitive equity release clients.
Benefits Not Affected
Benefits that are not means-tested - including the State Pension, Attendance Allowance, and Disability Living Allowance - are not affected by equity release capital. Only means-tested benefits are potentially at risk.
Spend-Down Strategy
Using the equity release proceeds quickly on the intended purpose (home improvement, gifting, care costs) rather than holding them in a bank account minimises the period during which capital exceeds benefit thresholds.
How It Works
Benefits assessment
The specialist adviser you are introduced to takes a complete picture of current benefit entitlements before any equity release is recommended.
Impact modelling
The specialist models the benefits impact of different equity release amounts and structures - lump sum vs drawdown, different levels of release.
Structure recommendation
The specialist adviser recommends the equity release structure that meets your needs while minimising the benefits impact where possible.
Ongoing review
If your circumstances change - including benefit entitlements - it is sensible to have your equity release arrangements reviewed by a specialist adviser.
Speak to our later life lending specialists
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Frequently asked questions
Will equity release affect my Pension Credit?
Possibly. Pension Credit is means-tested and includes a capital assessment. If equity release proceeds are held as cash and push your total capital above £10,000, Pension Credit is reduced (£1 per £500 above the threshold). Above £16,000, Pension Credit ends entirely. Spending the equity release proceeds quickly on their intended purpose reduces the impact. A drawdown plan limits cash holdings.
What means-tested benefits are affected by equity release?
The main means-tested benefits affected by equity release capital are: Pension Credit (including Guaranteed Credit and Savings Credit), Council Tax Reduction, Housing Benefit. Universal Credit (if you are of working age) has a capital limit of £16,000 for eligibility and £6,000 for taper. Non-means-tested benefits including State Pension, Attendance Allowance, DLA, and PIP are not affected.
Can I take equity release without losing my Pension Credit?
Yes - if the equity release is used for a specific purpose and the proceeds are not held as cash savings. Home improvement costs paid directly, for example, convert the capital from savings to property improvement. Drawdown plans where you take only what is needed and spend it immediately minimise the period during which your capital exceeds the thresholds.
Will equity release affect Attendance Allowance?
No - Attendance Allowance is not means-tested and is not affected by equity release capital. It is awarded based on care needs, not financial circumstances.
Should I inform the DWP if I take equity release?
You should inform the relevant benefits authority of any change in your financial circumstances, including receiving a lump sum from equity release. Failure to declare capital changes that affect means-tested benefit entitlements is a benefits compliance issue. The specialist advisers we introduce advise clients to inform the appropriate authority and manage the declaration process carefully.