How Do You Pay Back Equity Release?

Equity release can be a great way to free up cash, if you’re over the age of 55. It’s tax-free and you can withdraw in small amounts or as a lump sum. If you have a lot of questions surrounding equity release, you are not alone. In this guide, we’re looking specifically at how you pay back equity release.

How Is Equity Release Paid Back

Unlike other types of mortgages, equity release is fairly straightforward when it comes to paying off the loan.

Typically, equity release is paid back when you die or if you go into permanent care.

What Happens If You Can’t Pay It Back?

If you select a no-negative equity mortgage, you won’t need to worry about passing on any debt to your family or loved ones. You have protection as only the value of your property will be used to pay back the loan. However, the catch is that the loan value tends to be lower than the market-value of your property. Also, your benefactors won’t be able to inherit as much. These are important considerations to bear in mind, but to summarise, you are only obligated to pay back the loan after you die or go into long-term care and you shouldn’t need to pay back more than the value of your property. Anything that exceeds that will be written off.

Until then, you are free to live in your home as you please.

Can I Pay Back Sooner?

You can choose to pay off your interest in instalments. In fact, this is recommended, otherwise the interest could compound to a point where there will be no property value left for your benefactors to inherit. If you want to protect some of the value of your property, it’s worth keeping an eye on your interest.

If you want to pay off your equity release mortgage sooner, perhaps because you want to downsize, you may have to pay an early repayment penalty. This is something you should consider before signing up to equity release.

Enquire About Equity Release Today

Agentis are mortgage specialists with over 80 years’ combined industry experience. Speak to us today to arrange your initial consultation and enquire about equity release and whether it’s right for you. Speak to us today to organise your free initial consultation.