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Equity release with an existing mortgage

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Oct 23, 2022

How to get equity release with an existing mortgage in place on your property?

You might consider releasing equity if you are a homeowner who wants to let go of some of your property’s value.

This article will discuss equity release options without or with a mortgage. We’ll also examine how each works and how a broker could help.

Click the link below to speak with an equity release financial adviser to discuss equity release schemes and equity release products.

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If you have a mortgage, can you get equity release?

A mortgage on your home does not automatically disqualify you from taking an equity release loan. You will need to consider your situation, but above 55 years of age, you may be eligible for an equity release lifetime mortgage.

What happens if there is still a mortgage to repay?

Most equity is used to pay your mortgage. Any equity left over goes to you. You may want just to release enough equity to pay your mortgage and have some income each month, or you might need to borrow additional cash as a lump sum.

Although it might sound appealing, paying off your mortgage with equity release can significantly impact your future financial situation. It is important to seek advice from a broker specialising in equity release plans and lifetime mortgages.

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There are many types of equity release schemes available

There are two types of equity release mortgage available to you if you have an outstanding mortgage: home conversion plans or lifetime mortgages.

Mortgages for life

A lifetime mortgage is the most popular option for equity release. This is usually available to people over 55. A lifetime mortgage allows you to borrow money against your home’s value. This can be paid as a cash lump sum or a regular monthly payment.

To ensure that your equity release provider has sole charge of your property, the money must be used to pay any outstanding mortgage. This is because the amount of equity you can release depends on your age and circumstances. It may not be sufficient to pay off your loan. The amount you borrow can have an impact on the interest rates.

Click the link below to speak with a financial adviser to discuss the equity release process, how equity release funds work and equity release with an existing mortgage.

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Plans for home reversion

The less popular option of the two is the home reversion plan. Also known as a life lease, it is not mandatory to use the tax-free cash you receive for your mortgage payment. Instead, the repayable amount is a percentage of your home, and no interest is accrued.

A home reversion plan is a simple agreement. You sell a part of your home to a mortgage lender for less than the market value. In return, you get either regular payments or a lump sum of cash that you can use to pay your monthly mortgage or pay off your mortgage in full or in part.

The downside to the home reversion plan? You can sell your share at a price below the property’s market value, making it less popular than a lifetime mortgage.

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What a mortgage advisor can do to help you if your mortgage is still outstanding

Depending on your circumstances, it can be complicated to plan for equity release. A mortgage on your house or existing debt can make it more difficult, limiting your options for borrowing and lenders.

If you are considering this type of loan in conjunction with a mortgage, it is best to talk to an equity release broker with extensive experience securing such loans.

Our brokers will help you determine which equity release process is best for you, how much you can borrow when you release equity, and how you should take it. You can also get direct access to the best rates lenders, which could save you thousands of pounds over the long term.

Click the link below to begin your equity release journey online now.

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Equity release without a mortgage

You can consider an equity loan if you have paid off your mortgage. However, it will give you more options when it comes down to borrowing.

You can still get the same lifetime mortgage or home reversion plan options without a mortgage. However, any money you release will go directly to your account and not be used to pay off your existing home loan.

This means you might need to borrow less and give away less of your home. You won’t have to worry about being able to borrow enough money to pay your mortgage.

What lenders would allow it?

For an equity release loan, you will need to contact a specialist company or the people you would typically associate with pensions and insurance, such as Aviva and L&G. Traditional high-street banks do not offer these loans.

If you are trying to get an equity release loan, but you have a mortgage, it is possible to be restricted by certain lenders due to their minimum age and maximum borrowing requirements. This is where a broker can help you save a lot of time and effort.

There are other ways to get equity.

Other options may be available if you don’t want to sell your equity but are interested in releasing some of it.

Only mortgages for retirement interest

A retirement-interest-only mortgage works in the same way as a lifetime mortgage. You borrow capital against the home’s value but pay monthly interest instead of letting the loan roll up over time. This could make it more affordable than a lifetime mortgage.

Personal loan

A personal loan may be an option depending on your needs. A personal loan is a loan that you repay each month. Depending on the loan’s size, it may be secured with your property or interest.


A simple way to save money is to downsize to a smaller home. You don’t have to take on additional debt; you can simply receive the difference between the selling and buying price as a lump sum of cash. However, you will need to move house. This can be difficult for both the physical and emotional.

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Match you with an expert in equity release mortgages

Equity release with an existing mortgage or without a mortgage is complicated. It is worth speaking to an equity release broker. We can help you choose the right option but also shop around for the best deal and negotiate on your behalf so you don’t pay too much.

We will assess your situation and match you up with the best advice tailored to you. Our brokers are on hand, start online below now.

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