Can I release equity if I still have a mortgage?

For some homeowners either in or approaching retirement a mortgage has turned from an opportunity to own a home into a financial burden which they are unable to bear on a reduced retirement income. This is the case for many homeowners.

Surprisingly, the solution to this problem actually lies in the equity that has built up in the value of your home. The answer takes the form of a Lifetime Mortgage, a type of equity release product, which enables homeowners aged 55 and over to release a portion of their home’s value as a tax-free cash lump sum. If you release equity in this way you can use the money however you wish, even to clear an existing mortgage.

Releasing equity from your home with a Lifetime Mortgage allows homeowners to access tax-free cash with no need to make monthly payments unless you want to. You are not selling your home and will retain 100% ownership, and you can even guarantee an inheritance for your loved ones with a variety of flexible features available.

The amount that you can release will depend on your age and property value; the older you are and the more valuable your home the more you can release.

If you still have a mortgage it does not mean that you cannot release equity from your home. In fact, it is not uncommon to be unable to pay the remainder of your mortgage when you are in or approaching retirement. By using a Lifetime Mortgage to clear your existing mortgage, you could even find that there are funds left over to help achieve your other long-held goals.

These could include plans such as home improvements, a brand-new car, debt clearance, or any other needs that you might have. The amount that you can release from your home must be enough to clear the full amount of your existing mortgage, although some do use their savings to assist with this. After that, your money can be spent however you want.

Use our free equity release calculator below and see your estimate of how much you could release from your home.

Releasing equity from your home to pay off an existing mortgage can be incredibly simple. Provided that the amount you can release with a Lifetime Mortgage is enough to cover what you owe, or you have enough in savings to cover the difference, you can release equity from you home and clear your existing mortgage in one legal transaction.

You might be wondering ‘should I repay my mortgage?’, and it is right to consider your options as depending on your age and income remortgaging could be right for you. However, there are many benefits of paying off an existing mortgage by releasing equity from your home, from the removal of stress and worry regarding monthly payments, to knowing that your home is secure and fully paid for.

Many of our customers seek to release equity from their home to clear an existing repayment or interest-only mortgage, freeing up their budget to be spent elsewhere.

A Lifetime Mortgage is incredibly flexible and unrestrictive as it can be transferred to another property should you decide to move, subject to the lender’s criteria, and the mortgage can be repaid early if you choose to do so. Early repayment charges could be due if you repay early, however.

Another benefit is that your Lifetime Mortgage will come from an Equity Release Council approved lender. As such, you will benefit from the no negative equity guarantee, ensuring that the mortgage debt is not passed on to your heirs as you can never owe more than the value of your home. The mortgage, plus any interest, is repaid with the sale of your home when you have either passed away or entered permanent long-term care.

To find out if releasing equity from your home to pay off your existing mortgage and debts, and perhaps have some funds left over, is right for you simply use our interactive calculator to receive an instant estimate of how much you can release.

Alternatively, you can free phone 0808 231 1968 to speak to a specialist who can answer all of your initial questions and provide guidance based on your unique details. If you want to proceed, you can book in a free appointment with a fully qualified equity release specialist local to you.