Can I Release Equity from My Home If I Still Have a Mortgage on My Property?

Homeowners who have an outstanding mortgage are still eligible to release equity, on the basis that they meet the lenders criteria. If you are looking to release equity from a home you have not completely paid off, you will be required to use the funds you secure to pay off the remainder of the mortgage as this is one of the terms and conditions of equity release. Any excess money remaining after the mortgage has been completely paid will be yours to spend how you please.

Naturally, the amount of money remaining on the mortgage will impact on your application to release equity. If the outstanding mortgage amount is greater than the sum the lender would be willing to release from your home, then you may not be able to take out an equity release plan. However, in some cases, it is possible for you to still release money as long as you have the sufficient funds to cover the shortfall and lenders will require this to be evidenced.

When applying for an equity release plan, lenders will enquire about how much of your home you actually own. Along with a range of other factors including age, health and property value, this will determine whether the lender accepts your application, and how much they are willing to allow you to release.

With 21% of retirees1 still paying a mortgage (according to research conducted by YouGov and Old Mutual Wealth), the option of releasing equity from their home could appeal to many people over the age of 55. Outstanding mortgage payments were the most common form of debt faced by retirees, followed by credit card debts and unsecured loans.

If the reason you are looking to release equity is to pay off the mortgage on your property, it is important to consider the full repercussions. Whilst finally paying off your mortgage may seem like an attractive proposition, releasing equity from your home may not put you in a superior position, financially or personally. It is possible that the funds made available to you by equity release could impact the size of your estate and your entitlement to means⁠-⁠tested benefits, either now or in the future.

So whilst it is possible to release equity from a home when you still have a mortgage to pay, it is vital that you seek the advice of an experienced equity release expert or the HRMC and benefits agencies before committing to any plan to ensure you are not damaging your financial security.

For more help deciding whether an equity release plan would be beneficial for you and your situation, the Age Partnership team can help offer comprehensive, honest advice. For more help, visit our homepage or call us now on 08080 555 222 .

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Equity release may involve a home reversion plan or lifetime mortgage which is secured against your property and will reduce the value of your estate and impact funding long⁠-⁠term care. To understand the features and risks ask for a personalised illustration.

Think carefully before securing debts against your home. By extending the term of these debts, you will be increasing the overall cost.