Since 2020, 8 in 10 UK homes have increased in value by more than 5%, with an average rise of £60,800, according to figures released by Zoopla in July 2025. What’s more, the value of 1 million homes has soared by 50% or more in the last five years. Read on to find out why that could be good news for homeowners.
As a homeowner, you’ll probably be pleased to learn the value of your home has increased. However, it may seem like this increase won’t affect your finances that much, since the money is tied up in your home rather than being readily accessible.
Here are four ways you could benefit from property prices rising.
1. You could access a lower interest rate on your mortgage
If you’re paying a mortgage, rising property prices could improve your finances.
The interest rate you pay on your mortgage is influenced by several factors, including the portion of the property you own, known as equity. If your house is worth £300,000 and your mortgage is £150,000, your equity would be 50%.
There are two key ways the amount of equity you hold can increase:
- Mortgage repayments
- The value of your home rising
Homeowners with more equity in their property typically pose less of a risk to lenders. As your equity rises, you’ll usually be able to access more competitive interest rates. This could reduce your outgoings and cut the overall cost of borrowing.
For example, in September 2025, Moneyfacts reported that the average interest rate on a two-year fixed rate deal for homeowners with 10% equity was 5.27%. The interest rate fell to 4.48% for homeowners looking for the same deal with 40% equity in their home.
Imagine you have a £250,000 repayment mortgage with a term of 25 years. If the interest rate is:
- 27%, you’d repay £1,501 a month and £200,355 in interest over the full mortgage term
- 48%, you’d repay £1,386 a month and £165,894 in interest over the full mortgage term.
So, while the value of your property might seem to be irrelevant to your finances, it could reduce your current outgoings and save you thousands over the long term.
2. You may be able to release equity from your home now
The value of your home rising could mean it’s possible to increase the loan secured against your home, allowing you to access some of the equity you’ve built up.
Some lenders may allow you to increase your total mortgage to 85% of the property’s value, so it could be a useful way to borrow large sums. Remember, lenders will consider other factors besides the value of your home, such as your income.
There are lots of reasons why you might borrow more through your mortgage, from paying for a property renovation project to clearing other debt.
While borrowing more through your mortgage may be attractive, keep in mind that it will usually mean your repayments will rise or the term of your mortgage is extended.
Although mortgage interest rates may be lower than other forms of borrowing, you’ll often repay over a long period. As a result, the total interest repaid could be higher than you expect.
3. You could access property wealth by downsizing
Even if it’s not on the cards now, you might plan to downsize in the future. Rising property prices could give you more choice when you’re looking for your next home.
Moving to a cheaper home could release property wealth that you might use for retirement, support your family, or simply increase your day-to-day spending.
Of course, the property you’re moving to might also have experienced a rise in value. Plus, moving home comes with costs. So, it’s important to calculate how much wealth you could release before making plans.
4. You could use your home to fund retirement
A lifetime mortgage could allow you to access property wealth and remain living in your home, which some people might find valuable when they retire.
A lifetime mortgage is a form of equity release. It involves taking out a loan that’s secured against your home. However, unlike a traditional loan, you don’t need to make regular repayments. Instead, the interest is rolled up, and the total value of the loan is repaid when you pass away or move into long-term care.
To take out a lifetime mortgage, you usually need to be aged 55 or over, and if you have an outstanding mortgage, you’ll need to use the loan to repay it. How much you can borrow will depend on a range of factors, but it’s typically between 20% and 60% of your home’s value.
A lifetime mortgage could provide a welcome boost to your finances when you retire.
However, it’s essential that you understand the long-term effects. As you won’t need to make interest repayments, the total amount owed when you pass away can be far higher than the initial amount you borrowed. As a result, a lifetime mortgage can reduce the value of your estate and what you leave behind for loved ones.
Get in touch to talk about your mortgage or equity release
If you’d like to talk about your mortgage or equity release, please get in touch. We’re here to help you review your options and understand how your decision could affect your finances now and in the future.
Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.
Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.
Equity release will reduce the value of your estate and can affect your eligibility for means-tested benefits.
A lifetime mortgage is a loan secured against your home. To understand the features and risks, ask for a personalised illustration.
