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

Freeing up capital can be a great way to repay an existing mortgage, increase your income, or pay for care needs. Capital release is a popular option for UK homeowners who want to unlock tax-free cash from their properties. The short answer is yes, it is possible to use a capital release plan to pay off your current mortgage. In fact, using equity to pay for a mortgage is one of the most common reasons why homeowners use capital release. People often ask: “Can capital release be paid in advance?” The answer is yes, you can.

If you decide to cancel your annuity mortgage early, you'll settle your debt, but you may have to pay significant early repayment fees. It's important to get personalized advice from a capital release specialist to understand more about the early mortgage repayment process. It is possible to access part of the capital of your home to pay your current mortgage. This would only be worthwhile if the interest applied to the new loan secured by the home's equity is cheaper than the mortgage repayments. However, you should look beyond interest and also consider early repayment fees when you pay off your mortgage early, and the costs of setting up and closing the new loan. The most important factor will be inflated interest rates, but there will also be trading fees and fees for advising on capital release.

If the amount you can release is less than the outstanding mortgage debt on your property, you may need to consider another option to pay it off, as your lender will likely require you to pay off your outstanding debts as a condition of the plan. In addition, your eligibility for capital release will depend on several factors, such as your age, the value of the property, and the balance of the mortgage. If your current mortgage has been fully paid off, you'll have access to more of your home equity to apply for a loan, either with a lifetime mortgage or with a home reversal plan. However, every situation is different, so it's best to discuss your options with a share issuance advisor. Capital release providers require that the property have positive capital, which means that its value is greater than the outstanding mortgage balance. This means that the amount you can release will depend on the equity you have in your property once your current mortgage has been paid off. The rising cost of living is just one of the many reasons why more and more UK homeowners are freeing up capital for their homes in the future.

Mortgage Advice Bureau Later Life has a free calculator that can provide you with a quote for the amount you could release. There may be a smaller percentage of capital release providers that allow you to take out a lifetime mortgage or other capital release plan with an existing mortgage. Freeing up your home's equity as a way to pay off your mortgage early is becoming an increasingly popular strategy for homeowners age 55 and older to increase their retirement income. It is recommended that you compare the offers of several mortgage lenders and talk to a financial advisor to determine if remortgaging to free up capital is the right option for you. A lifetime mortgage is the most popular form of capital release and a loan secured against your property. While a calculator may be useful for an initial evaluation, it is recommended that you seek mortgage advice from a financial advisor or independent mortgage broker about the capital release process before making any decision.

Nigel Cook
Nigel Cook

Coffee expert. Hardcore social media fan. Wannabe tv junkie. Amateur web fanatic. Incurable internet scholar. Infuriatingly humble travel trailblazer.

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