Expert VerifiedWhat You Should Know About Lasting Power of Attorney and Equity Release
- Last Updated: 23 Oct 2025
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Be aware. Equity release comes with drawbacks which are important to think about. Lifetime mortgages are secured loans. Compound interest means the amount you owe can grow quickly. Equity release reduces your estate's value and may impact means-tested benefits.Key Takeaways...
- Equity release allows over-55s to access tax-free cash tied up in their homes.
- A Lasting Power of Attorney (LPA) grants someone authority to make decisions on your behalf if you lack capacity.
- LPAs are essential for managing equity release, especially for drawdown products.
- Without a LPA, your family would need to apply for deputyship, a time-consuming and costly process.
- There are two types of LPA in the UK: Property & Financial Affairs, and Health & Welfare.
- Legal advice is strongly recommended when setting up an LPA or considering equity release.
- For a full cost breakdown, visit the Equity Release Costs Checklist.
In today’s ever-changing financial landscape, equity release and lasting power of attorney have become increasingly important topics for many UK homeowners.
When considering the criteria for equity release, and as life expectancy continues to rise, it is more important than ever to make sure you have a plan in place should you become incapable of looking after your own affairs.
In This Article, You Will Discover:
In this article, the EveryInvestor team delves into how equity release can offer financial flexibility in retirement and discuss the importance of a lasting power of attorney in safeguarding your financial future.
A look at the role that equity release and lasting power of attorney can play in achieving financial security and peace of mind...
What Is Equity Release?
Equity release refers to financial products that allow homeowners aged 55 and over to unlock cash tied up in their property, without having to sell or move.
There are two primary types:
- Lifetime Mortgage: A loan secured against your home repaid upon death or when moving into care.
- Home Reversion Plan: Sell part or all of your home to release a lump sum while retaining the right to live there rent-free.
Funds from equity release are tax-free and can be used for any legal purpose.
What Is a Lasting Power of Attorney (LPA)?
A Lasting Power of Attorney (LPA) is a legal document that allows you to appoint one or more individuals (attorneys) to manage your affairs should you lose the mental capacity to do so yourself.
There are two types of LPA in England and Wales:
- Property and Financial Affairs: Manages bills, property, pensions, savings, and equity release.
- Health and Welfare: Makes decisions about daily routines, medical care, and living arrangements.
To be valid, an LPA must be registered with the Office of the Public Guardian (OPG).
How Equity Release and LPA Work Together
If you lose mental capacity after entering an equity release agreement, only an appointed attorney (via LPA) can manage future drawdowns or product-related decisions on your behalf.
It is essential to ensure your LPA explicitly covers financial matters like equity release. Your provider may refuse to act on instructions from someone not granted decision-making legal authority.
Without an LPA, loved ones must apply for deputyship through the Court of Protection — a long, costly, and stressful process.
Why Should I Combine Equity Release With a Lasting Power of Attorney?
You should combine equity release with a Lasting Power of Attorney (LPA) as a precaution against any future situation where you may be unable to make decisions about your equity release on your own.
With a LPA, your attorney will interact with your lender as if they were you, and will sign any documentation or undertakings on your behalf.
Some lenders offer their clients the opportunity to set up a LPA if they have taken out an equity release loan.2
Some reasons to consider taking out a LPA include...
- Ageing and illness: As you age or face health challenges, the risk of losing mental capacity increases. Dementia, stroke, or severe accidents can all lead to a loss of capacity, making it essential to have a LPA in place beforehand to ensure your affairs are managed according to your wishes.
- Peace of mind: By setting up a LPA, you can find comfort in knowing that a person you trust will take decisions on your behalf if you are unable to make them yourself. This can give you, your family, and friends peace of mind knowing that your interests and wishes will be respected.
- Financial planning: Establishing a LPA can be an essential part of your financial planning, particularly if you have complex financial affairs or significant assets, such as property or investments.
- Healthcare decisions: You can appoint someone you trust to make healthcare decisions for you in the event that you are unable to make them on your own. This means your preferences will be followed, even if you cannot express them at the time. This can include decisions about your medical treatment, care, and living arrangements.
Why You Need a LPA with Drawdown Mortgages
Drawdown lifetime mortgages allow you to release funds as needed from a pre-agreed facility. If you lose mental capacity and haven’t appointed an attorney, further withdrawals can be blocked.
Here’s how an LPA simplifies drawdown access:
- Your attorney can immediately draw funds on your behalf.
- Avoids delays or refusals from your lender.
- Ensures your plan remains usable even if you are mentally incapacitated.
Providers may request a registered LPA during the initial application or before releasing further drawdown amounts.
For drawdown security, consider setting up an LPA alongside your lifetime mortgage.
Types of LPAs & When to Set One Up
Property and Financial Affairs LPA
- Authorises attorneys to manage income, spending, property, and financial products.
- Can be used immediately or activated upon incapacity.
Health and Welfare LPA
- Deals with healthcare and personal care decisions.
- Valid only once capacity is lost.
When to Set Up a LPA
The ideal time to set up an LPA is before any loss of mental ability — typically when you're in good health and capable. If you wait until you can’t decide for yourself, it’s too late.
Without an LPA, your loved ones must go to court for deputyship — a process that takes months and may not result in the person you want managing your affairs.
Making Drawdowns With and Without an LPA
With a Valid LPA
- Your attorney contacts the lender with a registered LPA.
- They sign on your behalf and complete required documentation.
- Provider confirms the drawdown aligns with LPA terms.
Without a LPA
- Your attorney cannot access your plan.
- Family must apply to the Court of Protection.
- This delays access to funds and may cause financial hardship.
- The appointed deputy may not be your preferred choice.
Setting up a LPA now protects your home loan flexibility for the future.
Real Case Study: Equity Release & LPA in Action
A couple with a joint drawdown lifetime mortgage had a remaining facility of £60,000. One partner suffered a stroke and could no longer sign documents.
✅ Because they had an LPA in place, the spouse could act immediately, withdraw further funds, and pay for care costs without delays.
❌ Without a LPA, the drawdown would have been frozen until a deputyship order was granted — a process potentially taking 3–6 months.
Common Questions
Equity release refers to a financial product that allows older adults 55 and over to access the equity tied up in their property, typically in the form of a tax-free lump sum or regular income, whilst still being able to live in their home.
On the other hand, Lasting Power of Attorney (LPA) is a legal document that grants someone the authority to make decisions on behalf of another individual, known as the donor, in case they become mentally or physically incapable of doing so themselves.
Whilst equity release focuses on unlocking property wealth, LPA ensures that someone trusted can manage the donor’s affairs.
Equity release and LPA are two separate concepts, but they may intersect when an older adult with a LPA considers releasing equity from their property.
It is important to seek professional advice to understand how these two elements can work together and any potential implications they may have on each other.
Yes, you can still release equity from your property if you have a Lasting Power of Attorney (LPA) in place.
A LPA is a legal document that allows someone you trust (your attorney) to make decisions on your behalf should you lose mental capacity.
If you have a LPA, your attorney can act on your behalf in matters related to equity release, including choosing the most suitable product and overseeing the application process.
It is crucial to involve your attorney in the decision-making process to ensure that your interests are protected and any financial decisions made align with your wishes and best interests.
Equity release can be a suitable option for older adults 55 and over with Lasting Power of Attorney (LPA), but suitability depends on individual circumstances.
Whilst having a LPA in place ensures that someone you trust can make financial decisions on your behalf, it is crucial to consider their involvement in the equity release process.
Your attorney should be included in discussions and understand the implications of releasing equity from your property.
Consulting with an independent financial adviser is recommended to assess whether equity release aligns with your financial goals, overall estate planning, and the best interests of all parties involved.
Combining equity release and Lasting Power of Attorney (LPA) can have both advantages and disadvantages.
On the positive side, having a LPA allows someone you trust to act on your behalf in matters related to equity release, ensuring that your interests are protected.
Your attorney can help you navigate the complex process, make informed decisions, and oversee the application.
However, it is important to consider the potential drawbacks as well.
Releasing equity may reduce the value of your estate and the inheritance you leave behind.
Moreover, it could impact your eligibility for means-tested benefits and may not be the most suitable option for everyone.
Seeking independent financial advice and involving your attorney in the decision-making process is crucial to fully understand the implications and make an informed choice.
Having a Lasting Power of Attorney (LPA) can significantly affect the equity release process.
With a LPA in place, your attorney can act on your behalf, making decisions related to equity release and overseeing the application process.
They can ensure that your interests are protected, help you understand the implications, and make informed choices.
However, it is important to involve your attorney from the beginning and provide them with all the necessary information to make informed decisions on your behalf.
Their involvement can streamline the process and provide peace of mind, knowing that someone you trust is looking out for your best interests.
The Court of Protection (CP) and the Office of the Public Guardian (OPG)9 are there to act in the best interests of people not mentally able to make their own decisions about their finances or welfare.
The CP makes the decisions, and the OPG’s responsible for overseeing that these are carried out as ordered by the court.
No, a Lasting Power of Attorney can not be appointed by a co-borrower on your behalf, as only you or the court can appoint someone to look after your affairs.
This would need to be done via a LPA you had signed previously and that has been invoked because you are now incapable of overseeing your own affairs.
If no LPA is in place and you become incapacitated, a family member would need to apply to the Court of Protection to become your deputy and be authorised to act on your behalf.
If a borrower has lost their mental capacity, equity release is still possible provided it is going to be used for the borrower’s own welfare and care.
If there is a LPA in place, the attorney will also need to provide a letter from an appropriate medical professional confirming that the borrower has lost their mental capacity.
If there is not a LPA in place, a family member or friend can apply to the Court of Protection to become a deputy, who will manage the incapacitated person’s financial affairs under the auspices of the court.
However, as a deputy you may still need to apply to the court for permission to secure an equity release mortgage to take care of your family member at home.
The equity release advice process should include a thorough investigation of what the borrower’s care needs are and what sort of equity release product would serve these needs best, and then follow the appropriate legal steps to secure the equity release plan.
The following steps must be taken when advising a borrower who lacks the capacity to manage their own affairs:
- The potential borrower would need to be assessed in line with the Mental Capacity Act10 to make sure they meet the incapacity criteria.
- The advisor will need to check if there is an existing LPA registered with the OPG.
- If none exists, an application must be made at the CP to appoint a deputy.
- The lender will require a certified copy of the LPA or deputyship in order to process the application.
Using an independent equity release broker or advisor will help make the process less demanding and ensure you are given the best solutions for your situation.
Yes, your parents can obtain equity release if you have a Lasting Power of Attorney, provided you can prove to the lender that the money will be used to benefit your parents.
With the rising cost of living, you may be required to access your parents’ equity to supplement their retirement income.
The lender may need you to provide additional documentation to support your request, so make sure that your parents’ LPA is registered with the Court of Protection.
Equity release clients should take out a Lasting Power of Attorney to ensure they have peace of mind that their financial matters will be taken care of if they are incapacitated.
In Conclusion
Combining equity release with a Lasting Power of Attorney offers complete financial control and future protection.
For homeowners exploring drawdown plans or later-life lending, setting up an LPA ensures that someone you trust can manage your affairs if you become unable to.
Prepare now — not later. Seek legal and financial advice from FCA-regulated experts to formalise your plans and protect your assets.
Disclaimer:
All information was accurate at the time of publication in July 2025. Laws and financial products are subject to change. Always seek personalised advice before acting.
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