Equity release when one partner dies or moves into care

An equity release plan is built to last as long as you do. The Equity Release Council, the trade body whose standards most plans follow, says a plan is designed to let you stay living in your home until you either die or become unable to continue living there¹. On a joint plan, the money is not repayable when the first partner dies. It becomes repayable when the last surviving borrower dies or moves into long-term care, and the property is then sold².

That single rule answers most of what couples want to know. A surviving partner on a joint plan stays in the home on the same terms³. A partner who moves into a care home while the other remains in the property does not trigger repayment either, because the plan runs until the last borrower leaves. The trouble starts with plans taken out in one name only: unless the mortgage can be repaid in full, the property has to be sold and the partner must find somewhere else to live³.

The rest of this page sets out what happens to the home and the debt in each of those situations, how the debt grows and what that leaves for an estate, what early repayment costs, and where to get free help.

The plan is repaid when the last borrower dies or moves into permanent care

Equity release is most commonly a lifetime mortgage: a loan secured against your home that is repaid once you die or move into long-term care⁶. You borrow a portion of the property's value and make no monthly repayments; the loan and the rolled-up interest are repaid by your estate when you die or move into long-term care⁷. The other form, home reversion, works differently: on sale of the property, whether on death or a move into long-term care, the provider receives its share of the proceeds⁹.

The timing is what matters for a couple. Where a plan is taken out jointly with a partner or spouse, the amount owed usually only becomes repayable when the last surviving homeowner dies or moves into long-term care². That is the whole point of a joint plan, and it is why the Council's standards promise that you can live in your property for life, or until you move into permanent residential care¹⁰.

There is one condition worth knowing about before you take a plan out. The provider will want to make sure that a friend or tenant living in the home has no rights to continue living there when you die or move out, because that is when the loan must be repaid through selling the property³. A lodger or a relative who is not on the plan does not have the protection a joint borrower has.

What happens to the surviving partner and the home

On a joint plan the answer is straightforward: the surviving partner continues living in the property under the same terms³. Nothing is repaid at that point, no valuation is triggered, and the debt simply carries on accruing against the property.

On a single-name plan the answer is much harder. The Council states that unless the mortgage can be repaid in full, the property will have to be sold and the partner must find somewhere else to live³. That is true even for a spouse or long-term partner who has lived there for years, because they are not a borrower and the plan was never written to cover them. The family cannot simply inherit the property: the provider is entitled to recover as much as possible of the amount lent, which often means the property must be sold³.

If the family want to keep the property, they have to discuss with the provider whether it might be possible for them to pay off the remaining debt³. That is a conversation to have early, not after a deadline has passed.

There is a related trap for anyone who takes out a plan while single and later meets someone. You must tell your provider if you marry after taking out a plan, or if someone comes to live with you as your partner, and it may not be possible to add the new spouse or partner to the plan³. A new partner who moves in without being added has no right to stay if the borrower dies.

When a partner moves into care: benefits, care charges and the loan

A move into long-term care is a repayment trigger only when it is the last borrower who moves. If one partner moves into a care home and the other stays in the property, the plan continues. If the person moving into care is the only borrower, the property is sold and the amount borrowed, plus interest, is paid back to the provider¹.

The Council is clear that a plan cannot be used to fund a move into care in the sense of leaving the home empty: if the property owners are moving into long-term care and leaving their home, an equity release mortgage would not be permissible¹¹. The plan exists to let you stay in your home, not to finance your departure from it.

The time allowed to sell the property is typically between 6 months and 1 year¹. That window matters because it is the period in which the family can decide whether to sell or to repay the debt another way.

Benefits need attention at the same time. If you already claim benefits, you must tell the Department for Work and Pensions or your council about the money you receive from equity release¹². The same reporting duty applies to a surviving partner's changed circumstances after a death. On the bereavement side, where the deceased person was part of a couple, the surviving partner receives a 3-month run-on for the assessment period in which their partner dies and two subsequent assessment periods, and that run-on ends if the bereaved person forms a couple with a new partner during the run-on period¹⁵.

How the debt grows and what is left in the estate

Because no monthly repayments are made, the debt grows over time and can erode the value of your property¹⁶. Which? puts it plainly: your debt will grow each year and you could end up with little when the property is eventually sold⁶. The longer the plan runs, and the higher the rate, the more of the property's value the debt consumes.

Which? gives a worked example: on a £250,000 property with a lifetime mortgage at 5.5% over 25 years, releasing £75,000 means you could relinquish up to 70% of your property's value¹⁷. That is an illustration of how compounding works on a plan with no repayments, not a prediction for any particular household.

When a person dies, their debts are paid off from their estate¹⁸. If the deceased person has left assets, those assets form part of the estate, and it may be possible for the creditor to recover the money owed from it¹⁹. In England and Wales, if the deceased person has assets in their estate, joint or sole, the debts become a liability on the estate²⁰.

Two protections soften this. With some lenders, you will never owe more than the value of your home, under a no negative equity guarantee⁵. And the Council's standards promise that you can live in your property for life, or until you move into permanent residential care¹⁰. Where the guarantee applies, a falling property market cannot leave the family with a debt larger than the home.

There is also an inheritance tax point for couples. Where the entire estate is left to a surviving spouse or civil partner, it is exempt²¹. Property held by joint tenants passes to the surviving joint owner irrespective of any provision made in a will²². And where a person dies leaving pension property to a spouse or civil partner, the value transferred is treated as also attributable to the property the spouse or civil partner receives under the scheme, and the recipient's estate is treated as increased by that value²³.

Selling, moving or repaying early: charges and protections

Ending a plan early can be expensive. The Financial Ombudsman Service warns that if you want to end an equity release agreement early, you might have to pay an early repayment charge, and this can often be a significant amount²⁴. StepChange advises checking early repayment charges when choosing a plan, precisely because they vary²⁵. Selling your home is itself a trigger for repayment, and paying back earlier than expected may involve early repayment charges²⁶.

There is one clear exception. Where a borrower needs to move into long-term care and the property is sold, and no spouse or partner is still entitled to live in the property, you will not have to pay any early repayment charges⁴. That is the situation most families face when the last borrower leaves the home, and it means the sale proceeds go to the debt rather than to a penalty.

If you want to move rather than repay, you can repay your product or, depending on the property you already own, transfer the product to your new home, but there may be charges for doing so⁵. Porting a plan to a new property depends on the lender accepting the new home as security.

Will the family owe more than the house is worth?

Not necessarily, and the answer depends on the guarantee attached to the plan. With some lenders, you will never owe more than the value of your home, under a no negative equity guarantee⁵. Where that applies, the estate cannot be pursued for a shortfall if property values fall.

Equity release carries other risks that outlive the borrower. StepChange lists the main ones: it may impact the size of your estate after your death; future property prices might be higher or lower than they are today; it may affect your tax position; it may impact the benefits you already get or that you can apply for; there are implications with securing other debts against your home; and consolidating debts over a longer period may mean you pay more overall⁵.

The practical consequence for a family is that the property is not automatically inherited. The provider is entitled to recover as much as possible of the amount lent, often meaning the property must be sold³. If the family want to keep it, they have to discuss with the provider whether they can pay off the remaining debt³.

Where to get advice and help

The Equity Release Council offers help and information on equity release and can be reached on 0300 012 0239²⁷. It is a voluntary trade body whose mission is to help more over 50s make informed choices about their property wealth²⁸. Its member advisers must consider your personal circumstances, including an assessment of your income and expenses, and will explore alternatives to equity release²⁹.

For debt problems, StepChange and National Debtline both give free advice, including on equity release and on debts after death⁵. If a plan was sold to you and something went wrong, the Financial Ombudsman Service can look at complaints about equity release²⁴.

After a death there is a lot of administration, and some of it is time-limited. HMRC runs a Bereavement Helpline³⁰, and the government's Tell Us Once service lets you report a death to several departments at once³¹. If your partner has died since 5 April 2022 you can still claim Marriage Allowance by phoning the Income Tax helpline³². Bereavement Support Payment may be available if you are under state pension age and your partner has died³³, and cohabiting parents and carers whose partner dies from 9 February 2023 can claim it as long as they satisfy the eligibility criteria³⁴. From 30 August 2018, "partner" can include cohabiting couples who were not in a legal union when one of the couple dies³⁵.