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Equity Release

Learn More About Equity Release Options

Equity Release mortgages are not like residential mortgages. They help you secure a loan against the value of your property. In these guides we outline what makes them different, the eligibility criteria and help you decide if it’s an avenue you would like to pursue. It’s a way to free up money in your later years, but with many factors influencing the loan, it’s good to learn as much as you can from qualified mortgage professionals.

Posted On: August 31, 2021
Updated On: August 9, 2022

Can I Pay Off Equity Release Early?

If you don’t want to be tied down with a mortgage, it’s understandable that you would be questioning whether you can pay off equity release early. With equity release you have the added consideration that the more interest you accrue, the more this will affect the amount your benefactors can inherit.

Let’s say you inherit a considerable amount, or you win the lottery. The latter may be unlikely, but if you find yourself in a more favourable financial position during your equity release plan, it can give you peace of mind to know that you can pay off your loan and interest sooner than planned.

With equity release, you traditionally pay back the loan once you die or go into full-time care. If you’ve opted for the lifetime mortgage, your equity release provider will then sell your property and use the value to pay off your loan and interest.

With a no-negative equity mortgage, the amount you owe stops with the value of your property. None of your other assets or relative’s assets will be affected.

What’s the catch with early repayments?

As with most mortgages, paying back your loan prematurely usually involves an early repayment fee, also known as a redemption fee. You should check this with your lender and factor the amount into your budget. Some lenders may charge a set percentage, based on the original amount borrowed, which reduces over a specific number of years, whereas others may have a more complex early repayment calculation.

Just to confuse things, there isn’t always an early repayment fee with equity release. Some lenders will cancel any redemption charges after you reach a certain age or after a number of years.

Should you pay back equity release early?

Whether you want to pay back equity release early is entirely up to you. But it’s worth consulting a mortgage advisor first, as they can break down in more detail the pros and cons of making early repayments.

There are other options to consider if you want to pay back an equity release loan sooner. For example, if you’d feel more comfortable paying back interest in regular instalments, you can make voluntary monthly repayments, which can alleviate any concerns of the final interest amount exceeding the remaining equity on your property.

Contact Agentis today to speak to one of our professional mortgage brokers and advisors, about equity release and whether it’s right for you. We offer a free initial consultation and as a ‘Whole of Market’ mortgage broker we can introduce you to some of the best deals on the market.