Equity Release After Death: Repaying the Loan

Discovering that a loved one had an equity release plan can come as a surprise, especially if it was not widely discussed in the family. The key thing to know is that you have time — the 12-month repayment window is there to allow the estate to be administered properly. Understanding how equity release works after death will help you plan ahead and avoid unnecessary stress.

How the 12-Month Repayment Timeline Works

A lifetime mortgage is a loan secured against the property. Unlike a conventional mortgage, there are usually no monthly repayments — instead, interest rolls up and is added to the loan balance over time. The full amount (original loan plus accumulated interest) becomes repayable when the last borrower dies (or moves permanently into long-term care).

Under the terms of Equity Release Council membership (which covers the vast majority of UK equity release providers), the estate has 12 months from the date of death to repay the loan. Within this period:

• Interest continues to accrue on the outstanding balance at the agreed rate — the estate is not charged penalty interest simply because the plan has been triggered by death
• The estate is not required to sell the property immediately — executors have time to obtain probate, value the estate, and market the property
• The provider should not initiate repossession proceedings within the 12-month window if the executor is engaging with them in good faith

The first step is to notify the equity release provider of the death as soon as possible. Their bereavement or redemption team will take over the account and provide a redemption statement showing the outstanding balance at the date of death.

The Negative Equity Guarantee

One of the most important consumer protections in the equity release market is the negative equity guarantee, which is a mandatory feature for all members of the Equity Release Council (ERC).

The negative equity guarantee means that:

• The total amount repayable (original loan plus all accumulated interest) will never exceed the sale value of the property at the time of repayment
• If the property sells for less than the outstanding debt, the provider writes off the shortfall — the estate and beneficiaries are not personally liable for the difference
• The guarantee applies even in scenarios where property values fall or where the loan has been running for many decades

To check whether the provider is an ERC member, visit equityreleasecouncil.com. Most mainstream providers — Aviva, Legal & General, Just, Pure Retirement, Hodge, and others — are ERC members. If the plan was arranged through a non-ERC provider, the terms may differ and you should seek legal advice.

Options for Repaying the Loan

There are two main ways to repay an equity release loan after death:

1. Selling the property: This is by far the most common route. The executor markets and sells the property, repays the outstanding equity release loan from the sale proceeds, and distributes any remaining equity to the beneficiaries. There is no penalty for selling the property after death to repay an equity release plan.

2. Repaying from other estate assets: If the estate has sufficient liquid assets (savings, investments, or funds from other sources), it may be possible to repay the equity release loan without selling the property. This could allow the property to be passed to a beneficiary free of the loan. The beneficiary could also choose to take out a conventional mortgage to replace the equity release loan, releasing the property from the provider's charge — though this would require them to qualify for a mortgage.

Some providers may also allow a beneficiary to "port" or take over the equity release plan, but this is not standard practice and is subject to individual provider terms and the beneficiary meeting eligibility criteria.

What Happens If Probate Is Delayed

Probate delays are increasingly common and can significantly affect the timeline for repaying an equity release loan. If the 12-month window is at risk of being breached because probate is still outstanding, it is essential to communicate proactively with the equity release provider.

In practice, most ERC member providers will:

• Agree to extend the 12-month window where there are genuine delays outside the executor's control
• Accept a copy of the probate application (PA1P form) as evidence that the process is underway
• Provide a named contact within the bereavement team for ongoing communication

You should put all communications in writing and keep copies. Request written confirmation of any agreed extension to the repayment window. If the provider is not being cooperative, seek legal advice promptly.

You can also contact the Equity Release Council directly if you have concerns about how a provider is handling the repayment process following a death. Their helpline is 0300 012 2150.

Finding the Equity Release Documents

If you discover that the deceased had equity release but cannot find the original plan documents, there are several ways to track them down:

• Search the deceased's paperwork, email accounts, and any filing systems for correspondence from the provider
• Check the Land Registry title to the property — the equity release mortgage will appear as a registered charge, showing the lender's name
• Contact the solicitor who acted on the original equity release transaction — they should hold copies of the plan documents
• Search the Equity Release Council's provider directory (equityreleasecouncil.com) to identify who the plan might be with