Equity Release With a Mortgage

Do You Qualify for Equity Release With an Existing Mortgage?
Contributors: Nicola Date, Katherine Read. Edited by Rachel Wait & Reviewed by Francis Hui
Should You Get an Equity Release Plan With an Existing Mortgage? What Types of Equity Release Can You Get? Discover the Pros & Cons of Getting Equity Release With a Mortgage…

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Yes, you can get equity release with a mortgage. the lifetime mortgage must repay any outstanding mortgage before additional funds can be used for any other objectives.

Are you wondering, Can I get equity release with mortgage payments still outstanding? Well, we’ve got the answers you’ve been searching for.

The uses of equity release can be endless, but if you aren’t aware of all the terms and conditions, you could seriously miss out!

What You’ll Learn in This Article:

    If you don’t know much about the wild-world of all things property-related, you’re not alone.

    SovereignBoss is constantly researching up-to-date topics related to all things equity release.

    Are you looking to learn what we discovered about paying off your mortgage?

    Find out now!

    Can I Get Equity Release With a Mortgage?

    Yes, you can get equity release with an existing mortgage, as long as there is only a small amount to repay.

    You’ll need to get in touch with a financial advisor who will be able to let you know if your mortgage is small enough.

    Can I Use Equity Release to Pay Off My Existing Mortgage?

    You can use equity release to pay off your existing mortgage, as long as the amount is less than the equity available in your property.

    This is because you can’t have simultaneous mortgages¹ on your property; you’ll need to pay off the one to unlock the other.

    2 Types of Equity Release You Can Get if You Have an Existing Mortgage

    The 2 types of equity release you can get if you have an existing mortgage is a lifetime mortgage and a home reversion scheme.

    What’s the difference?

    Here’s more information.

    Lifetime Mortgages

    Lifetime mortgages are by far the most popular form of equity release and its formula is often used when describing such products.

    In essence, it’s a loan against your primary residence, while still retaining full ownership. In some cases, Can be released against a buy-to-let or second home as well.

    If it isn’t voluntarily repaid in your lifetime, the loan and compound interest will be covered from the sale of the property in question once you (and your fellow policyholder²) passes away or relocates to long-term care.

    Home Reversion Plans

    Home reversion plans are the precursors to lifetime mortgages and are vastly less popular.

    In such cases, your property will be sold to the lender below market value, or a portion of it.

    You’ll receive tax-free cash in return, plus life-long, rent-free tenancy on the property.

    Which Option Should I Choose?

    The option you should choose will depend on your personal circumstances.

    Your best bet is to get in touch with a whole of market financial advisor who can help you find the best retirement solutions for your needs; looking both at equity release and the alternatives.

    How Does Re-mortgaging to Release Equity Work?

    Remortaging to release equity works by borrowing against your property to release tax-free cash.

    What this means is that the monthly interest owed will likely go up, and your mortgage will increase.

    However, the benefit is that you’re essentially freeing up cash instead of keeping it tied into your property value.

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    Pros & Cons of Equity Release With an Existing Mortgage

    The pros and cons of equity release with an existing mortgage are that while you’ll release tax-free cash, it’s vastly less than what you’d receive if you sold your property outright.

    Is that all?

    Here’s more pros and cons.


    • The money you receive through equity release is tax-free.
    • You no longer need to worry about monthly payments.
    • You can reduce the costs of lifetime mortgage equity release plans by voluntarily paying the monthly interest.
    • There’s no more fears of risking foreclosure³.


    • You’ll reduce the value or your estate.
    • There are costs involved in remortgaging to an equity release loan.
    • Equity release lifetime mortgages typically have higher interest rates than regular mortgages. View the most current rates here.
    • You’ll either drain your property of equity or no longer be the owner.

    What Happens to My Mortgage When I Take Out Equity Release?

    Your mortgage will be paid off using some of the equity when you take out an equity release. This way, the lender will get the first charge on your estate.

    Your equity release solicitors will contact your current mortgage lenders to obtain a formal redemption statement.

    It will show the balance outstanding at a specific date, and how much additional interest has accrued daily. 

    How Long Does It Take to Clear an Existing Mortgage Using Equity Release?

    It will usually take between 4 to 6 weeks to clear an existing mortgage using equity release. More complicated cases can take up to 12 weeks.

    The equity release and mortgage payment will be completed in one transaction.

    What If I Can’t Cover My Outstanding Mortgage With Equity Release?

    If you can’t cover your existing mortgage with equity release, you’ll need to wait until you have access to more equity.

    The older you are, the more money you can access from your estate.

    Should I Pay Off My Mortgage Early?

    Yes, it’s usually a good idea to pay off your mortgage early as you’ll no longer have monthly payments, freeing up space in your budget.

    You can use the extra income in any way you wish.

    Approximately 28%4 of UK homeowners over 55 still have a mortgage outstanding. If this applies to you, you’ll likely want to settle the balance before you stop working.

    Common Questions

    I Already Have an Equity Release Lifetime Mortgage, Can I Borrow More?

    What if I Can’t Cover My Outstanding Mortgage With Equity Release?

    What Is the Difference Between a Standard Residential Mortgage & an Equity Release Lifetime Mortgage?

    How Can I Use the Money I Get From Equity Release?

    Why Re-Mortgage in Order to Release Cash?

    How Much Equity Could I Release With an Existing Mortgage?

    In Conclusion

    It’s not uncommon for UK residents to feel like they haven’t fully prepared for retirement and if you’re in that category,.

    You’re probably looking for ways to supplement your retirement income.

    If so, using equity release to settle your mortgage can be a great consideration.

    Furthermore, you can only unlock equity if you have a small mortgage left, so you’ll likely have equity remaining.

    Whatever you decide, be sure to seek professional advice so that you can weigh up all your options.

    Additionally, equity release with a mortgage does impact your family, so you should probably discuss it with your heirs before making any concrete decisions.

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