Equity Release and Divorce: Your Options Explained (2026)
Divorce after 55 presents unique financial challenges. Equity release can help one party stay in the family home while the other receives their share of the equity. Here's how it works and what to consider.
Yes — equity release can be used in divorce settlements for couples over 55. One party can take out equity release to buy out the other's share of the property, allowing one person to remain in the home while the other receives their equity. This is particularly useful when neither party can afford to maintain the property on a single income.
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Using equity release in a divorce settlement
When a couple over 55 divorces, the family home is often the largest asset. The challenge is how to divide it fairly when neither party may be able to afford the property on a single income, and downsizing may not be desirable or practical.
Equity release offers a solution: one party can take out a lifetime mortgage to release enough equity to buy out the other party's share. The staying party retains the home; the leaving party receives their share of the equity in cash.
This works best when:
- The property has significant equity (typically £150,000+ after any existing mortgage)
- The staying party is 55+ and meets the age requirements
- The leaving party needs liquid funds for a new home or living expenses
- Neither party wants to force a sale of the family home
What happens to an existing equity release plan?
If you already have an equity release plan and are divorcing, the plan must be addressed as part of the financial settlement. There are several options:
- One party keeps the plan and the property. The staying party takes over the plan (this usually requires lender consent) and compensates the leaving party for their share of the remaining equity.
- Repay the plan and split the equity. If there is sufficient equity, the plan can be repaid (early repayment charges may apply) and the remaining equity divided between the parties.
- Sell the property, repay the plan, and divide the proceeds. This is the cleanest option but may not be desirable if one party wants to stay in the home.
- Port the plan to a new property. If both parties are moving, the plan may be portable to one of the new properties (subject to lender approval).
The court will consider all options as part of the overall financial settlement. The welfare of any dependent children is the court's primary consideration.
How a buyout works
A typical equity release buyout in divorce works as follows:
- Property valuation: The property is independently valued. For example, the home is worth £400,000 with no mortgage.
- Equity split agreed: The couple agrees (or the court orders) a 50/50 split. Each party is entitled to £200,000 of equity.
- Equity release application: The staying party applies for a lifetime mortgage to release £200,000 (plus any costs). At age 65, the LTV might be 30% — £120,000. If this is insufficient, the staying party may need to contribute additional funds from savings or accept a smaller buyout.
- Funds transferred: On completion, the £200,000 is transferred to the leaving party. The staying party now has a lifetime mortgage of £200,000 against a property worth £400,000.
- Ongoing: The staying party lives in the property for life. The loan accumulates interest. When they die or move into care, the property is sold and the loan repaid.
David and Susan, both 68 — Their home is worth £500,000. They agree to a 50/50 split. David wants to stay. He applies for a lifetime mortgage of £250,000. At 68, his LTV is 32% — £160,000. This is not enough to buy out Susan's £250,000 share.
They negotiate: David takes £160,000 via equity release and contributes £40,000 from his savings, giving Susan £200,000. Susan accepts £50,000 less than her full share in exchange for David keeping the family home where their grandchildren visit. David now has a £160,000 lifetime mortgage at 5.8% fixed.
How courts view equity release in divorce
Family courts have broad discretion in financial settlements. When considering equity release, the court will look at:
- The needs of both parties: Housing needs, income needs, and any health requirements.
- The welfare of any children: Maintaining stability for children is a primary consideration.
- The feasibility of the equity release: Whether the staying party can realistically obtain equity release (age, property value, health).
- The long-term impact: How the equity release will affect the staying party's financial position over time (compound interest, reduced estate, potential benefit impacts).
- Whether alternatives are more suitable: Downsizing, remortgaging, or selling may be preferable in some cases.
The court cannot force a lender to grant equity release. The staying party must qualify in their own right. If they are under 55, equity release is not an option and the court will consider alternatives.
It is essential to obtain both regulated financial advice (for the equity release) and legal advice (for the divorce settlement). These should be coordinated.
Alternatives to equity release in divorce
Equity release is not the only option for dividing property wealth in divorce:
| Alternative | How It Works | Best For |
|---|---|---|
| Downsizing | Sell the family home, buy two smaller properties | Both parties want to move; sufficient equity for two deposits |
| Remortgaging | One party remortgages to buy out the other | Staying party has income for monthly repayments; under 55 |
| Deferred sale | One party stays until children leave home, then sell | Young children; need for stability |
| Pension offsetting | One party keeps the pension; the other keeps more property equity | Significant pension wealth; one party closer to retirement |
| Mesher order | Court order delaying sale until a trigger event (e.g., children turn 18) | Need to keep children in family home; uncertain future finances |
Your solicitor and financial adviser can help you evaluate which option is most suitable for your circumstances.
Model a buyout scenario
Enter your age and property value to see how much equity release could fund a buyout in your divorce settlement.
People Also Ask
No. The court cannot force a lender to grant equity release, and cannot force your ex to apply. Equity release must be voluntary and the applicant must meet the lender's criteria.
Equity release is not available under 55. You would need to consider remortgaging, selling the property, or a Mesher order.
Yes, the equity release is part of the financial settlement. The court will consider the long-term impact on the staying party's finances, including compound interest and reduced estate value.
Yes, if there is an existing mortgage, the equity release can be used to repay it as part of the buyout. The remaining released funds go to the leaving party.
If you are joint owners, both parties typically need to consent to the equity release. If the property is in one party's name only, that party can apply independently, but the court may still consider it in the settlement.
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Reviewed by Chris, CII-qualified equity release specialist · Last reviewed July 2026