For a homeowner over 55, a secured loan is usually the cheaper way to clear debt if you can afford a monthly payment; equity release is the route when you cannot, or do not want to, make payments at all. A lifetime mortgage, the most common form of equity release, has no required monthly payments: interest rolls up and is repaid when you die or move into long term care, so the amount owed grows every year. A secured loan, also called a homeowner loan or second charge mortgage, is repaid monthly over a fixed term of up to 25 years, so the total cost is known from the start.
- A lifetime mortgage is available from age 55; a secured loan at any adult age, subject to affordability.
- A lifetime mortgage has no required monthly payment; interest rolls up and compounds until the home is sold.
- A secured loan is repaid monthly over a fixed term, so the total repayable is fixed at the outset.
- Equity Release Council standards include a no negative equity guarantee and the right to stay in your home for life.
- A secured loan is secured on your home, which may be repossessed if you do not keep up the payments.
- Checking your options will not affect your credit score.
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| Equity release (lifetime mortgage) | Secured loan | |
|---|---|---|
| Rate level | Fixed for life under Council standards; interest compounds because nothing is paid | Fixed or variable for a set term; interest is paid down each month |
| Fees | Arrangement, valuation, adviser and solicitor fees, often £2,000 to £3,500 in total | Arrangement, valuation and broker fees, usually added to the loan |
| Term | For life, or until you move into long term care | Commonly 3 to 25 years, and most lenders set a maximum age at the end of the term |
| Secured on your home? | Yes, as a first charge; an existing mortgage must be repaid from the proceeds | Yes, as a second charge behind your existing mortgage |
| Effect on existing mortgage | It must be cleared, usually from the equity release money | None: the mortgage stays exactly as it is |
| Credit file | Credit history matters less, because there is no payment to assess | Affordability and credit history are assessed; adverse credit considered by specialists |
| Speed | Typically 6 to 10 weeks, including independent legal advice | Typically 2 to 4 weeks |
| Amount available | A percentage of the property value that rises with age, often 20% to 50% | Subject to combined loan to value, commonly up to 75% to 85%, and affordability |
| Best when | You cannot afford any monthly payment and want no repayments in your lifetime | You have income to repay and want the debt cleared at a known total cost |
| Worst when | You could afford payments and want to protect inheritance | The monthly payment would not fit a retirement income |
How does a lifetime mortgage work?
A lifetime mortgage is a loan secured on your home, available from age 55, that is normally repaid only when the last borrower dies or moves permanently into care. You keep ownership of the property and can live in it for life. There is no requirement to make monthly payments, although most modern plans let you pay some or all of the interest voluntarily. Any interest you do not pay is added to the loan, and the following year's interest is charged on the larger balance.
That compounding is the defining feature. Because nothing is repaid, the debt grows year on year, and the longer you live the larger the sum taken from the sale of the home. Equity Release Council members must offer a fixed or capped rate for life, a no negative equity guarantee so the debt can never exceed the sale value of the home, the right to remain in the property for life, and the right to move the loan to another suitable property. Independent legal advice is compulsory, and the adviser must hold a specific equity release qualification.
Equity release is regulated by the FCA as a distinct product, and Equiclear does not arrange it. Any existing mortgage must be repaid from the money released, which reduces what is left for other debts. The amount available depends on age and property value rather than income: a 55 year old might be offered around a fifth of the value, rising towards half for the oldest borrowers.
How does a secured loan work for the over 55s?
A secured loan, also called a homeowner loan or second charge mortgage, is a separate loan registered behind your existing mortgage, repaid in fixed monthly instalments over a term you choose, commonly three to 25 years. Your mortgage is unchanged. Each payment repays interest and some capital, so the balance falls every month and the total you will repay is set out before you sign. Our secured loans for pensioners and the over 60s page covers lender attitudes to age in detail.
Age matters in two ways. Most lenders set a maximum age at the end of the term, often 75 to 85, which limits how long a term an older borrower can take. And affordability is assessed on retirement income, so pension income, annuities and any earnings need to cover the new payment alongside the mortgage and living costs. Many lenders consider pension income in full, and FLA data shows loan consolidation makes up at least 60% of the 44,725 second charge agreements written in the 12 months to June 2026.
The risk is the same as for any secured borrowing. If you do not keep up the payments, the lender can add charges, register arrears and ultimately apply to the court to repossess your home. On a fixed retirement income that makes the affordability assessment more important, not less, and a good adviser will test whether the payment still fits if one pension stops or a partner dies.
What does roll-up interest do to £20,000 over 15 years?
The example below clears the same £20,000 of debt, credit cards of £12,000 and a personal loan of £8,000, with either a secured loan repaid over 15 years or a lifetime mortgage where no payments are made. For simplicity it applies the same illustrative rate to both products, compounded annually. Real lifetime mortgage rates differ, and many plans compound monthly, which speeds the roll-up.
Illustrative rates: The rates in this example are fictional and used only to show how the numbers work. They are not an offer. Your actual rate may be lower or higher and will depend on your circumstances, your property and the lender. Consolidating debt over a longer term can mean you pay more interest overall, even if your monthly payment falls.
| Position | Monthly | Total repayable |
|---|---|---|
| Current payments: cards £12,000 at 24.9% (minimum payments) and personal loan £8,000 at 12.9% over 5 years | £532 | Depends on how long the cards take to clear |
| Secured loan: £20,000 at 7.9% over 15 years | £190 | £34,196 |
| Lifetime mortgage: £20,000 at 7.9% rolled up, no payments | None | £42,780 after 10 years, £62,568 after 15, £91,508 after 20 |
At this rate the rolled-up debt roughly doubles every nine years. After 15 years the lifetime mortgage owes £62,568 against £34,196 repaid on the secured loan, a gap of more than £28,000 that keeps widening for as long as the borrower lives. What the lifetime mortgage buys for that is £190 a month kept in the household budget, which on a modest pension can be the difference between managing and not. The secured loan calculator shows the monthly figure for other amounts and terms.
What does each mean for your home and your family's inheritance?
Both products are charges on the home, but they take from the estate in different ways. A secured loan reduces what you leave only by the balance outstanding when the property is sold; repay it in full and the home passes on unencumbered. A lifetime mortgage is repaid from the sale of the home after death, and because the debt has been compounding, the lender's share of the value can be far larger than the sum originally borrowed. Some plans offer inheritance protection, ring fencing a percentage of the value in return for a smaller loan.
There are two safeguards on the equity release side. The no negative equity guarantee means your estate never owes more than the home sells for, so the debt cannot pass to your family. And paying the interest voluntarily each month, which most modern plans allow up to a limit, stops the roll-up and makes the plan behave much like an interest only loan, at which point the comparison with a secured loan becomes one of rate and flexibility.
On the secured loan side, the safeguard is the affordability assessment and the fixed end date. The risk is that a payment that fits today does not fit in ten years, and a missed payment has consequences a lifetime mortgage does not carry. Anyone weighing the two should also consider means tested benefits, since money released can count as capital, and talk it through with family. MoneyHelper publishes free guidance on both products.
Which suits you, and what should you check first?
A secured loan usually suits you if a reliable retirement income covers the payment with room to spare, you are under a lender's maximum age for a term that keeps the payment affordable, and you want the debt gone at a known cost. It leaves your mortgage untouched, completes in a few weeks and protects the value of your home for whoever inherits it. If your mortgage deal is ending, see remortgaging to pay off debt over 60 too.
Equity release usually suits you if the debts are unaffordable on any monthly basis, if your income is too low or irregular for a secured loan to be considered, or if you have decided that using the value of your home in your lifetime matters more than passing it on. It is not a decision to make quickly, and Equiclear does not arrange it: it needs a specialist adviser with the equity release qualification, independent legal advice, and a conversation with anyone who expects to inherit.
Before either, get free, impartial advice. MoneyHelper, StepChange and Citizens Advice will look at your full budget and tell you whether clearing the debts with borrowing makes sense at all, or whether a debt management plan would leave you better off without a new charge on your home. For many over 55s that conversation is the most valuable step.
What improves your chances
- Work out your monthly budget in retirement, including a version where one pension or partner's income stops; if a payment still fits, price a secured loan first.
- Ask how long the secured loan term can run given your age, since the maximum age at the end of the term sets the monthly payment.
- Compare the total cost of each route over 10, 15 and 20 years, not just the monthly figure, and include all fees.
- Check the effect of money released on any means tested benefits, and talk to family about inheritance before deciding.
- Use only advisers with the right qualification: an FCA authorised broker for a secured loan, and a qualified equity release adviser for a lifetime mortgage.
Alternatives worth considering
Several routes sit between the two. A retirement interest only mortgage lets you pay the interest each month and repay the capital from the sale of the home, at a lower cost than roll-up. A remortgage to pay off debt may be cheaper than a secured loan if your mortgage deal is ending, as our over 60s remortgage page explains. Downsizing clears debt without any new borrowing. And if the debts are unaffordable rather than expensive, a debt management plan through a free charity freezes interest without touching your home; see consolidation vs a debt management plan.
Worried about debt? Get free advice first
If you're struggling, it's worth speaking to a free, impartial debt advice service before you borrow more. They don't sell anything and won't judge your situation.
- MoneyHelper: Free, impartial debt advice backed by government
- StepChange: The UK's largest free debt charity
- Citizens Advice: Free, confidential advice on debt and money
Checking your options with Equiclear will not affect your credit score.
Frequently asked questions
Is equity release or a secured loan better for paying off debt?
If you can afford a monthly payment, a secured loan is usually cheaper, because interest is paid down rather than compounding. If you cannot afford any payment, a lifetime mortgage clears the debt without a monthly commitment, at the cost of a growing balance repaid from your home later.
Can I get a secured loan if I am retired?
Yes. Many lenders consider pension income in full, and some lend to borrowers into their 80s, though the term is limited by the maximum age at the end of it. Affordability is assessed on retirement income. See secured loans for pensioners and the over 60s.
How much does equity release cost over time?
Because interest rolls up and compounds, the balance grows every year and can more than double over the life of a plan if no payments are made. Paying the interest voluntarily each month, which most modern plans allow, stops the balance growing. The worked example above shows the effect.
Can I still leave my home to my children with equity release?
Yes, but the lender is repaid from the sale first, so what is left depends on how long the plan has run and how the property value has moved. Some plans include inheritance protection, ring fencing a share of the value in return for a smaller loan.
Do I need to repay my existing mortgage to take equity release?
Yes. A lifetime mortgage is a first charge, so any existing mortgage must be cleared, usually from the money released, before the rest is available for debts. A secured loan does not need that: it sits behind the existing mortgage as a second charge and leaves it in place.
Can I pay off a lifetime mortgage early?
Usually, but early repayment charges can be significant and may apply for many years, depending on the plan. Council standards require the charge to be clearly set out. A secured loan is typically simpler to repay early; see paying off a secured loan early.
Does checking my options affect my credit score?
No. Checking your options will not affect your credit score. Equiclear does not search your credit file, and any check the broker makes at this stage is a soft search, which other lenders cannot see. Equiclear introduces you to an FCA authorised broker for a secured loan or remortgage; it does not arrange equity release, which needs a specialist adviser.