Using equity release to pay off your mortgage

Updated 3rd May 2022

When looking towards retirement, the last thing anyone needs is a major drain on their income. It’s for this reason, homeowners often ask whether equity release can be used to pay off an existing mortgage.

Many homeowners took out interest only endowment mortgages with the expectation that when the policy matured, it would be sufficient to pay off their mortgage altogether. Sadly, this has proven not to be the case, and many are now facing substantial shortfalls when it comes to settling mortgage debt.

Others entered the property market later in life and found that with retirement looming, they faced the prospect of substantial mortgage repayments every month for years to come. Should you find yourself in either of these positions, equity release could be the answer.

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Why use equity release to pay off your mortgage?

Probably the most significant source of capital available to most homeowners nearing the end of a mortgage is the roof over their heads.

Rather than selling the home, downsizing and moving to a new house, you could stay where you are and unlock some of the cash tied up in the value of your home, using the most popular form of equity release: a lifetime mortgage. The money you receive is tax free and there is no need to make monthly repayments.

Available to UK homeowners aged 55 and over, lifetime mortgages have helped a record number of people release a total of more than £3.89 billion in 2020, according to the Equity Release Council in 28th January 2021.

Converting to a lifetime mortgage

Converting to an equity release lifetime mortgage could help anyone taking a drop in income following retirement. Whilst you are effectively remortgaging, the big difference is that when you move to a lifetime mortgage you no longer have to make monthly repayments. Instead, interest is charged on the loan amount, as well as all the interest from previous years, so the total to be repaid builds up over the life of the mortgage. The loan is only repaid when you die or move permanently into residential care, usually when your house is sold.

Any extra cash you release over and above the sum needed to pay off the mortgage, can be spent as you wish, from clearing other debts to helping the children get onto the housing ladder.

Useful features of a lifetime mortgage

If you’re considering equity release to pay off your mortgage, some lifetime mortgage lenders offer a number of flexible options that may be of use, including:

  • The ability to make voluntary partial repayments without incurring an early repayment penalty.
  • Inheritance protection to ring-fence a percentage of your home’s future value to be passed on as an inheritance.
  • Downsizing protection after 5 years, allowing you to move to a smaller property and repay your lifetime mortgage without incurring any early repayment charge.

If you or your partner are in poor health, you may also be able to release more equity through an enhanced lifetime mortgage.

How much equity could you release to pay off your mortgage?

With a lifetime mortgage you could release up to 55% of the equity in your home, depending on your personal circumstances. To get an idea of how much you could release use our free equity release calculator.

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Speak to an equity release specialist

Equity release is a big decision and is not the right choice for everyone. There are also many lifetime mortgage providers in the UK, so it’s important to speak to an equity release specialist who can look at your situation and research the market to find the solution best suited to your circumstances.

We have teamed with the award-winning independent specialists, Age Partnership whose professionally qualified advisers will be able to answer all of your questions on using equity release to pay off your mortgage.

If you would like to speak to a qualified adviser please ask for a call back .


We know it's a big decision!

That's why we have teamed up with Age Partnership one of the UK's leading equity release specialists.

Find out how much cash you could release by clicking on the button below.

How much cash can i get?

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