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You may be able to fund retirement costs without borrowing against your home. The main alternatives are using pension income or other assets, moving to a less expensive home, selling and renting, or considering a retirement interest-only mortgage. Each affects your cash, housing, regular outgoings and potentially your benefits or estate in a different way.
Which route fits depends on how much you need, your income and household, and whether staying in your home is important. Compare the net cash and long-term consequences—not just the amount you could access now.
Start with income and savings you already have
Check pension income and options
Review your State Pension forecast and any workplace or personal pensions before deciding that you need to use housing wealth. If you have a defined-contribution personal pension, GOV.UK describes flexible access and buying an annuity as possible ways to take it. With drawdown, the remaining pension stays invested and withdrawals reduce the pot; its value and the income it can support can change. An annuity exchanges pension funds for income under the annuity’s terms. These routes have different trade-offs and neither is right for everyone. See GOV.UK’s guide to taking a personal pension.
Consider cash savings and other assets
Savings or non-housing investments may cover some expenses without a loan secured on your home. Using them reduces the assets available for other needs, and a change in income or capital may affect means-tested support. There is no universally suitable order for drawing on pensions, savings and investments: consider the tax, investment and benefit consequences of your own circumstances before choosing.
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| Route | How it can provide funds | What changes or needs checking |
|---|---|---|
| Downsize | Sell your current home and buy a less expensive one; the difference may provide capital after costs and any debts are settled. | You move and may have less space or a different location. Include selling and purchase costs in the calculation. |
| Sell and rent | Selling and not buying another home can free more of the sale proceeds than buying a cheaper property. | Rent becomes an ongoing expense. Consider local availability, tenancy security, possible rent changes and whether you are comfortable no longer owning your home. |
| Retirement interest-only (RIO) mortgage | Borrow against the home while paying interest, typically with the capital repaid when the home is sold. | You need to afford the interest payments for as long as they are due; check lender terms and what happens if household income falls or a partner dies. |
Downsize only if the net proceeds work
The relevant figure is not the gap between the two property prices but what remains after selling, buying and moving. Allow for estate-agent, legal, survey, removal and purchase costs, as well as any debt to be repaid. A lower-cost home can also mean a change in location, space and ongoing household expenses. MoneyHelper recommends weighing the lifestyle impact and checking how changed income or savings could affect benefits. Read MoneyHelper’s guide to downsizing in retirement.
Count rent as a long-term cost if you sell
Selling and renting can release a larger sum than moving to a cheaper owned home, but the proceeds need to be considered alongside future rent and the security of your tenancy. You will generally have less control over rent increases and whether a landlord decides to sell. Compare realistic local rental options and likely ongoing costs with the value you place on remaining a homeowner. MoneyHelper discusses both downsizing and renting in its downsizing guidance.
Test RIO affordability beyond today
A RIO mortgage involves regular interest payments, while the capital is generally repaid when the home is sold. It is not a way to avoid the repayment obligation: it changes when the capital is due and requires payments in the meantime. Ask whether those payments remain affordable if income changes or one partner dies, and compare the lender’s actual terms, eligibility rules and rate with your other options. MoneyHelper explains RIO mortgages among the alternatives to equity release.
Compare the full consequences, not only the cash released
Use the same questions for each route so a larger immediate sum does not obscure its ongoing costs or risks:
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- Net amount: What remains after transaction costs, tax and repayment of existing debts?
- Home and location: Can you stay where you are, or would the option require a move or a change from owning to renting?
- Regular commitments: Are payments required, and could you still meet them if income falls or a partner dies?
- Exposure to change: Could the plan be affected by investment volatility, rent changes or interest accumulating?
- Benefits, care and estate: How might a change in income or capital affect means-tested benefits, local-authority support, care arrangements or what you leave behind? Check the rules for your specific circumstances rather than assuming an option preserves entitlement.
- Flexibility: How difficult would it be to change course if your health, household or housing needs changed?
MoneyHelper also describes home reversion. It is distinct from the options above: it involves giving up ownership of some or all of a home in return for money or a regular income, rather than simply using pension income, savings, a move or a RIO mortgage. Read the terms carefully before treating it as a comparable alternative.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Check benefit effects and get help comparing options
Changes to pension income or accessible capital can affect means-tested benefits and local-authority support, but the outcome depends on the benefit and your circumstances. GOV.UK explains how pension freedoms can interact with DWP benefits; check the applicable rules before withdrawing money or committing to a housing change. Read GOV.UK’s pension freedoms and benefits guidance.
The FCA’s review of equity-release sales and advice found cases where alternatives received little consideration and warned that a short-term gain can be outweighed by longer-term costs. It says suitability depends on the customer’s needs and circumstances. Read the FCA’s review findings.
If you seek regulated financial advice, check the firm on the FCA Firm Checker and make sure the adviser considers the alternatives in light of your needs, not just the amount you could release. MoneyHelper also advises exploring alternatives and checking an adviser’s registration. The right comparison depends on your cash need, income, health, household, home and priorities; this general guide cannot determine which route is suitable for you.
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