Equity release can be a genuinely useful way to improve your financial position in later life - but if you are currently receiving benefits, it is important to understand how releasing money from your home could affect what you are entitled to. Getting this wrong can result in losing support that may be worth more than the benefit of the equity release itself.

This guide explains which benefits are at risk, which are generally unaffected, and what steps can be taken to protect your position. Note that the guide relates to the position in April 2026 and is subject to change.

Why does equity release affect benefits?

Many state benefits are means-tested, which means your entitlement depends on your income and the level of savings or capital you hold. When you release equity from your home, the money you receive becomes a liquid asset - cash or savings - rather than property wealth. This change in the form of your assets can affect your entitlement to benefits that have savings or capital limits.

The key threshold to be aware of is the £16,000 savings limit that applies to a number of means-tested benefits. If the money you release takes your total savings above this level, you may lose entitlement entirely. Between £6,000 and £16,000, many benefits are reduced on a sliding scale.

Which benefits could be affected?

The benefits most commonly affected by equity release are those that are means-tested and include a capital or savings limit. These include Pension Credit, Housing Benefit, Council Tax Reduction, and Universal Credit.

Pension Credit is particularly important for many people in later life, as it can act as a gateway to other support including free dental treatment, help with NHS costs, and a free TV licence for those over 75. Losing Pension Credit due to increased savings can therefore have a knock-on effect beyond the benefit itself.

Council Tax Reduction is administered locally and the rules can vary between councils, but most schemes include a capital limit that mirrors the national means-tested benefit rules.

Which benefits are not affected?

Not all benefits are means-tested. Benefits that are based on your National Insurance record or paid universally are not affected by how much savings or capital you hold.

The State Pension is not means-tested and will not be affected by equity release. Attendance Allowance, Disability Living Allowance, and Personal Independence Payment are also not means-tested and are unaffected. Carer's Allowance is based on earnings rather than savings and will generally not be affected.

What can be done to protect benefits entitlement?

The good news is that there are legitimate ways to manage the impact of equity release on benefits - but they need to be planned carefully and ideally in advance.

The most straightforward approach is to spend the released funds promptly on allowable expenditure rather than holding them as savings. Spending money on home improvements, care costs, clearing debts, or making gifts to family members reduces the level of savings held and may keep you within the relevant thresholds. However, deliberately depriving yourself of assets in order to qualify for benefits - known as deprivation of assets - is taken seriously by benefit authorities and can result in you being treated as still holding those assets for assessment purposes. It is important to take proper advice before making any decisions.

Another option is to release money in smaller tranches over time using a drawdown lifetime mortgage rather than taking a single lump sum. This allows you to take only what you need when you need it, reducing the risk of accumulating savings that push you over the means-test threshold.

Some people also use the released funds to pay for care, adapt their home, or make other planned expenditures immediately on completion - again reducing the amount held as savings from day one.

Should I check my benefits position before applying for equity release?

Yes - and this is one of the most important steps you can take. Before proceeding with equity release, it is worth getting a full benefits check to understand exactly what you currently receive, what the rules are for each benefit, and how a given release amount would affect your entitlement.

A specialist equity release adviser will flag the benefits question as part of the advice process, but the detailed benefits assessment itself may require input from a benefits specialist or Citizens Advice. Your adviser can help you identify the right support.

How Aspect Mortgages can help

Aspect Mortgages is a member of the Equity Release Council, and Richard, Rachel, and Neil are each individually registered members and qualified to advise on equity release. Richard holds the Advanced Certificate in Mortgage Advice and Practice (Adv CeMAP) and the Certificate in Regulated Equity Release (CeRER). Rachel holds the Certificate in Mortgage Advice and Practice (CeMAP) and CeRER. Neil holds the Certificate for Financial Advisers (CertPFS) and the Certificate in Mortgage Advice (CertCII(MP)).

We always discuss the benefits position with clients as part of the advice process. If you are unsure how equity release might affect your entitlements, call us on 01257 812345 or visit our equity release page. We offer appointments in your own home, by video call, or at our Chorley office - whichever suits you best.