Is It Possible to Pay Back an Equity Release Loan?

There are a number of reasons why you might want or need to repay your equity release loan. With most lenders, this won’t be a problem, but you will be expected to pay a fee to cover for lost interest.

You Can Repay an Equity Release Loan Early?

If you decide to repay an equity release loan, you'll pay an early repayment charge of around 15%, although this sometimes decreases over the course of your lifetime. Otherwise, your equity release loan is repaid from your estate when you die.

Read on to learn more about the reasons to pay back an equity release loan, and a rough guide to the costs.

Looking for other information on Equity Release? This guide has info on 'Can equity release be paid back?' We have also writen extensively about:

• - Can you use equity release to pay off mortgage?
• - Can equity release be transferred to another property?
• - Can you be refused equity release?
• - Can equity release be repaid before death?

We update all our guides regularly. If you are researching Equity Release and we haven't got an exact guide that helps you, keep coming back as we update daily.

Making Interest Payments on Your Equity Loan

It may be that you don’t want to pay back your equity release loan in full but you want to make payments towards it, to minimise the impact on your estate when you do pass away. While you won’t be able to make payments towards the original loan value itself in small chunks, some agreements will allow you to pay the interest either in full or partially.

So, if you want the lump sum as an investment into a second property and you start generating rental income, you could put that towards the interest and then when you die your estate would only be liable for the original loan amount.

Equity Release: Downsizing Your Home

The most common reason for people to look to pay their equity release loan in full is when they want to downsize their home. You can only transfer an equity release loan to another property if it’s of the same or greater value, otherwise, the lender risks losing out.

So if, as you get older, you decide you want to move to a smaller property or to an area where house prices aren’t as high, you’ll likely have to pay off the equity release loan before you do.

There are other reasons to pay it off early as well, such as if you come into a large inheritance or you have a second property used for rental income but you decide to retire from running it, and sell the building to repay the debt on your home.

Equity Release: Fees for Repaying Early

There are costs attached to repaying your equity release loan early. These tend to start higher and decrease over time, the longer you are in your agreement and accruing interest, but some lenders will offer a flat fee and others may be tied to market conditions, so the fee could go up.

Your financial adviser and a solicitor will have taken you through the various scenarios of your equity release loan when you signed up.

We’ve got a ton of information about equity release across our website, so do some further reading if you want to learn more about the advantages, disadvantages and interest rates.

How Can Money Savings Advice Help You With Releasing Equity?

Here at Money Savings Advice, we have partnered with some of the UK’s leading Equity Release brokers. They have already helped thousands of people get the best Equity Release deal and they can do the same for you.

Choosing an independent adviser means they won’t recommend a scheme unless they are sure it is in your best interests. Their advice is also regulated by the FCA, which gives you an additional layer of protection.

If you would like to speak to one of these brokers who can provide you with a ‘whole market quote’ then click on the below and answer the very simple questions.