TL;DR: When the last surviving borrower on an equity release lifetime mortgage dies (or moves permanently into long-term care), the loan plus any rolled-up interest becomes repayable. The estate's executors normally have 12 months to repay the loan from the sale of the property, although some lenders allow longer. The property is sold by the executors on the open market; the equity release lender's first legal charge is redeemed from the sale proceeds; the remaining proceeds (after any redemption fees and the lender's specified administration charges) form part of the estate and pass to the beneficiaries. The "no negative equity guarantee" required of Equity Release Council members caps the repayment at the property's open-market sale value, so the estate cannot be left owing more than the property is worth.
Last reviewed May 2026
Equity release is the umbrella term for a group of products that allow homeowners aged 55 or over to release cash from their home without selling it or moving out. The dominant product is the lifetime mortgage, a loan secured against the property with no required monthly payments; the interest rolls up and the whole amount becomes repayable on the death of the last borrower or on permanent move into long-term care. Home reversion plans, the other equity release product, work differently and are now a small share of the market.
This guide explains exactly what happens at the end of a lifetime mortgage when the borrower dies: the steps the executors take, the lender's process, the timeline expected, the no negative equity guarantee, the inheritance tax effect, and what to do where the surviving borrower or family wants to keep the property.
The basic mechanics of a lifetime mortgage on death
A lifetime mortgage is a loan registered as a first legal charge against the property at the Land Registry. The borrower receives the loan as a lump sum, or as a drawdown facility used over time, with no monthly capital or interest payment required. Interest is added to the loan balance each month and compounds at the agreed rate. The loan balance therefore grows over time, faster on a lifetime mortgage with no payments than on one where the borrower chooses to make voluntary interest payments.
The trigger for repayment is normally the death of the last surviving borrower, or the last borrower moving permanently into long-term care or a residential care home. On the trigger event, the loan plus accumulated interest becomes due. The estate (acting through the executors) is responsible for repaying the loan to the lender.
The standard route is sale of the property: the executors put the property on the market, sell it, and use the proceeds to redeem the lifetime mortgage. The lender's first legal charge is removed from the title once the loan is repaid. The remaining proceeds form part of the estate and pass under the will (or under the intestacy rules if there is no will) to the beneficiaries.
The timeline from death to repayment
Most lifetime mortgage lenders allow 12 months from the death (or the move into long-term care) for the property to be sold and the loan repaid. Interest continues to roll up during this period, but the lender does not normally apply additional charges in the 12-month window beyond the standard interest rate.
Where the 12 months is not enough (for example, where probate is taking longer than usual, where the property needs work before sale, or where the market is slow), the executors should engage with the lender as early as possible. Most lenders are willing to grant an extension on a case-by-case basis, particularly where the executors are demonstrably making progress towards sale. Some lenders may apply a higher rate or an administration fee once the 12-month window is exceeded.
The probate process itself takes between three months and a year in straightforward cases, longer where the estate is complex or contested. The lender does not require probate to be granted before discussions begin; the executors can engage with the lender as soon as the death is registered.
The no negative equity guarantee
Lifetime mortgages offered by members of the Equity Release Council (which covers the great majority of the UK market) carry a "no negative equity guarantee". The guarantee means the amount repayable to the lender on sale is capped at the open-market sale value of the property. If the rolled-up loan balance exceeds the sale price, the lender writes off the excess and the estate owes nothing further.
The guarantee is a meaningful protection. Over very long borrower lifetimes, with rolled-up interest, a lifetime mortgage on a slow-growing or falling-value property could in theory exceed the property's value. The guarantee ensures the estate (and ultimately the beneficiaries) cannot be left with a debt beyond the property. The trade-off is that the inheritance left to the beneficiaries is whatever remains after the lender takes its share.
The guarantee applies provided the property is sold on the open market at a reasonable price. The lender's standards typically require the sale to be at fair market value, supported by independent valuations and proper marketing. Selling significantly below market value to a connected party would not be covered by the guarantee.
What happens to the survivor on a joint plan
Lifetime mortgages can be taken out jointly by two borrowers (commonly a married couple or civil partnership). The trigger for repayment is the death of the second borrower, not the first. The surviving borrower continues to live in the property under the same loan terms; the loan balance continues to roll up; nothing has to be paid back when the first borrower dies.
The legal ownership of the property is normally registered as joint tenants or tenants in common between the two borrowers. On the first death, the survivor inherits the deceased's share of the property under the joint tenancy rules, or under the will or intestacy rules if held as tenants in common. The lender does not require any action on the first death other than updating its records.
If the surviving borrower later moves into long-term care, the same trigger applies: the loan becomes repayable. If the surviving borrower wishes to move to a different property, the lifetime mortgage can sometimes be transferred ("port") to the new property, subject to the lender's portability rules and the new property meeting the lender's lending criteria.
Inheritance tax effect
The lifetime mortgage reduces the net value of the estate for inheritance tax purposes. The property's value at the date of death is included in the estate, but the outstanding loan balance is deducted as a debt of the estate. The net effect is that the value passing to the beneficiaries (and the IHT charge on it) reflects only the equity in the property at the date of death.
This can be a feature of the planning, not just a side effect. Where the property would otherwise produce an IHT charge above the available nil-rate band and residence nil-rate band, releasing equity and using the cash during life can reduce the eventual IHT charge, provided the cash is genuinely used (gifts under the seven-year rule, regular gifts out of surplus income, or spent on the borrower's quality of life). Simply holding the cash inside the estate negates the IHT benefit because the cash is then in the estate instead of the property.
The gift rules apply to any cash drawn from the lifetime mortgage and given to family. A gift of cash to children is a potentially exempt transfer, falling out of the estate if the donor survives seven years. The gift with reservation of benefit rules do not normally apply to a cash gift (the rules target gifts of assets the donor continues to use, which a cash gift does not), but expert advice is sensible on larger structures.
What if the family wants to keep the property
The estate is not obliged to sell the property. The executors can repay the lifetime mortgage from other estate assets (cash, investments, other property), or by raising a new mortgage on the property in a beneficiary's name. The lender's charge is removed once the loan is repaid, regardless of the source of the funds.
Where a beneficiary wishes to keep the property, the practical options are: take out a new mortgage in their own name to repay the lifetime mortgage (subject to the beneficiary's own affordability and the property's valuation), use other inherited estate funds to repay the loan, or buy the property from the estate at full market value. The mortgage advice for the beneficiary's new mortgage works under the standard FCA mortgage rules and follows the usual affordability and credit tests.
Time is the practical constraint. The 12-month window normally requires the new mortgage or alternative funding to be in place within that period. Earlier discussions with the lender and earlier engagement with a mortgage broker help avoid the property being forced to sale to meet the deadline.
How we verified this
This article reflects the FCA's Mortgage Conduct of Business Sourcebook (MCOB) rules for regulated lifetime mortgages, the Equity Release Council's standards for member firms (including the no negative equity guarantee), the HM Land Registry's published guidance on first legal charges and discharge on redemption, and HMRC's inheritance tax guidance on debts deductible from an estate. The probate process and timing reflect current GOV.UK probate guidance. Specific lender terms vary between firms; the lender's mortgage offer document and the original mortgage deed set out the position for the particular case.
Disclaimer: This article is general information about how equity release lifetime mortgages work on death. It is not financial or legal advice. The position depends on the specific lender's terms, the deceased's circumstances and the structure of the estate. Executors and beneficiaries should take advice from a probate solicitor and, where a beneficiary intends to keep the property, from an FCA-authorised mortgage broker.
Frequently asked questions
What happens to equity release when you die?
The lifetime mortgage plus accumulated interest becomes repayable on the death of the last surviving borrower (or on permanent move into long-term care). The executors normally have 12 months to sell the property and repay the loan. The lender's first legal charge is redeemed from the sale proceeds, and any remaining proceeds pass to the estate's beneficiaries under the will or the intestacy rules.
How long do you have to repay equity release after death?
Most lifetime mortgage lenders allow 12 months from the death for the property to be sold and the loan repaid. Interest continues to roll up during this period at the contract rate. Extensions are often available on request where probate or sale is taking longer; the lender should be contacted as early as possible.
Can my family keep the house if I have equity release?
Yes, if they repay the lifetime mortgage from another source: a new mortgage in the beneficiary's name, other inherited estate assets, or by buying the property from the estate at market value. The lender's charge is removed once the loan is repaid in full, regardless of the source of funds. The 12-month repayment window normally applies.
Will equity release leave my family in debt?
No, where the lifetime mortgage is from an Equity Release Council member firm and includes the no negative equity guarantee. The amount repayable to the lender is capped at the open-market sale value of the property. If the rolled-up loan exceeds the sale price, the lender writes off the difference and the estate owes nothing further beyond the sale proceeds.
Does equity release reduce inheritance tax?
The outstanding loan reduces the value of the estate for inheritance tax purposes, so the IHT charge on the property reflects only the net equity at the date of death. The IHT benefit only flows through fully where the released cash has been spent or given away (and survived the seven-year window). Cash sitting in the estate replaces the property value and produces no IHT saving.
