Can You Use Equity Release to Pay Off a Mortgage??

You’ve probably wondered if you can use equity release to clear an existing mortgage. Yes—you can. In fact, most providers require you to pay off your mortgage first as part of the process. This route works best for homeowners aged 55 or over with enough equity in their property. You don’t have to hunt for the answer—it’s clear and straightforward. 

Equity Release to Pay Off Mortgage

How It Works ?

Thinking about the steps involved? Your adviser or solicitor handles most of the process for you. Here’s what happens: 

1. Property valuation
2. Calculate your available equity
3. Existing mortgage is paid off directly
4. Any remaining funds are released to you

Is It Right for You?

You’re not alone if mortgage repayments are starting to feel unmanageable. Equity release may help you if:

  • You’re struggling with monthly payments
  • Your mortgage term is ending soon
  • You want to retire without payment stress
  • You have significant equity in your home

Take a moment to see if this aligns with your needs.

Equity Release to Pay Off Mortgage

How Much Equity Can You Use?

The amount you can release depends on your age, your property’s value, and your outstanding mortgage. Most people can access between 20% and 50% of their home’s value.

Example:
If your home is worth £300,000 and you qualify for 30%, you could release £90,000—enough to clear a £60,000 mortgage and keep £30,000.

Benefits of Using Equity Release to Clear a Mortgage

  • No more monthly repayments
  • Stay in your home
  • Reduce financial stress
  • Access extra cash (if equity allows)
Equity Release to Pay Off Mortgage
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Equity Release to Pay Off Mortgage

Important Considerations

Before you decide, consider these key points:

  • Interest rolls up over time (increasing the amount owed)
  • Reduces your inheritance
  • May affect your entitlement to benefits
  • Early repayment charges can apply in some cases

Types of Equity Release Suitable for This

01

Lifetime Mortgage

The most common option; loan is repaid when your property is sold.

02

Drawdown Lifetime Mortgage

Take only what you need—helps control interest.

Alternatives to Consider

Other ways to manage your mortgage:

01

Remortgaging

02

Downsizing to a smaller property

03

Retirement interest-only mortgages

You may be finding it difficult to clear your existing mortgage balance as you transition into retirement. You are not alone. It is a simple and practical way to gain a one-off lump sum to clear your debt—without having to sell or move.

Making financial decisions later in life can feel overwhelming, but with trusted advisors by your side, it doesn’t have to be stressful. Every year, around 70,000 people in the UK use equity release to access the wealth tied up in their homes. You can use these funds to settle your outstanding interest-only or repayment mortgage. This removes the burden of mandatory monthly payments from your pension income.

Unlock the equity in your home today

How It Helps You

Your financial security is important. Releasing equity offers a clear path to managing your retirement income without the pressure of a looming mortgage term.

01

Clear your existing mortgage debt completely. 

02

Stop making mandatory monthly mortgage repayments.

03

Stay in the home you love for the rest of your life.

04

Receive the money as a completely tax-free lump sum. 

Find the best plan

Frequently Asked Questions

Can you use equity release to pay off a mortgage?

Yes, paying off an existing mortgage is one of the most common reasons people choose this path. The equity release provider will use the new funds to settle your old mortgage first. If there are any funds left over, you receive them as a tax-free cash lump sum to use however you wish.

Will you lose ownership of your home?

You retain full ownership of your property when you take out a standard lifetime mortgage. You continue to live in your house exactly as you do now. The loan and accrued interest are only repaid when you pass away or move into long-term care.

Do you have to make monthly payments?

You do not have to make any monthly repayments. The interest rolls up over time and is added to your total loan amount. You can choose to make voluntary partial payments if you want to manage the growing interest, but this is entirely up to you.

Will releasing equity affect your state benefits?

It can affect your eligibility for means-tested benefits. Receiving a large cash lump sum may change your entitlement to support like Pension Credit or Council Tax Reduction. A qualified advisor will calculate exactly how this impacts your specific situation before you agree to anything.

What happens if property prices fall?

You are protected by a strict no negative equity guarantee (provided the plan is approved by the Equity Release Council). This means you or your estate will never owe more than the final sale value of your property. Your family will not be left with any debt from the plan.

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