13/09/2026
Myth: "Equity release will stop my benefits."
This is the final post in our myth-buster series, and it's different from the others , because this myth is partly true. Anyone who tells you equity release never affects benefits is wrong. Anyone who tells you it always does is also wrong. Here's the actual picture.
1. Some benefits are completely safe. The benefits system splits into two halves. Non-means-tested benefits : your State Pension, Attendance Allowance, Personal Independence Payment, Carer's Allowance are paid because of your contribution record or your needs, not your savings. Releasing equity doesn't touch these.
2. Means-tested benefits are where care is needed. Pension Credit and Council Tax Reduction are the two most commonly affected. The issue isn't the loan itself , it's the cash sitting in your bank account, which counts as capital. For Pension Credit, the first £10,000 of capital is ignored; above that, you're treated as having £1 a week of income for every £500. So a large lump sum landing in your account can reduce or in some cases end your entitlement.
3. How you take the money matters enormously. With a drawdown plan, you might set up a large reserve but only take a few thousand a year as needed keeping your bank balance below the thresholds, so Pension Credit and Council Tax Reduction can continue. Same equity, very different benefits outcome. This is one of the clearest examples of why the structure of a plan matters as much as the headline rate.
4. One trap to know about: "deprivation of capital." If you release money and then give large sums away say, to your children and later claim a means-tested benefit, the DWP can treat you as if you still had that money. Releasing £50k and gifting £40k to family doesn't reset the clock. If gifting is part of your plan, it needs discussing openly in the advice process, not arranged around it.
5. And a genuinely underrated flip side: billions of pounds of Pension Credit go unclaimed every year , and for some people, checking their benefits entitlement first is worth more than the equity they were about to release. A professional adviser checks what you're entitled to before recommending what you should borrow. Sometimes the best equity release advice is "not yet , claim this first."
The bottom line: if you receive, or might qualify for, any means-tested benefit, a benefits check isn't an optional extra to equity release advice , it's the first step.
💬 Are you (or a parent) receiving Pension Credit or Council Tax Reduction and wondering how this applies? Ask below in general terms and for anything specific to your circumstances, that's exactly what a proper advice conversation is for.
This is general information, not advice. Benefit rules and thresholds can change and depend on individual circumstances. Equity release involves a lifetime mortgage or home reversion plan, which is secured against your home and will reduce the value of your estate and may affect your entitlement to means-tested benefits. To understand the features and risks, ask for a personalised illustration.