Can you Release Equity If You Already Have a Mortgage?
One of the most common misconceptions about lifetime mortgages is that you can’t release equity if you still have a mortgage on your home.
This simply isn’t true.
In fact, many homeowners take out a lifetime mortgage precisely to repay an existing mortgage. Yet, the confusion around this topic stops people from exploring a financial solution that could ease their retirement worries or help them stay in the home they love.
Let’s set the record straight.
Can You Get a Lifetime Mortgage With an Existing Mortgage?
Yes, this is possible.
One of the core features of a lifetime mortgage is that it can be used to repay an existing mortgage. In fact, lenders will usually require this as part of the process. Part of the equity you release must be used to clear your current mortgage balance.
This means you can:
✅ Stay in your home
✅ Stop making monthly capital repayments
✅ Remove the pressure of needing to remortgage or downsize
It can be an effective way to take control of your finances in later life—especially if your current mortgage is interest-only and approaching the end of its term.
Why Do People Think You Can’t?
This myth often comes from the assumption that equity release is only available if your property is fully owned.
It’s true that if your mortgage is too large, it may reduce the amount of equity available to you. But provided there’s enough equity in your home to repay your existing mortgage and meet lender criteria, a lifetime mortgage is still very much on the table.
In fact, using a lifetime mortgage to repay an interest-only mortgage is one of the most common scenarios we deal with.
A Common Scenario
Imagine someone in their late 60s with an interest-only mortgage of £70,000 and no repayment plan. Their lender won’t extend the term and their income doesn’t meet affordability checks for a new standard mortgage.
They don’t want to move and don’t have the cash to clear the balance.
A lifetime mortgage could allow them to:
- Release enough equity to repay the £70,000 mortgage
- Stay in their home
- Remove the pressure of monthly repayments
They might even release extra funds to make home improvements or boost their retirement income.
Things to Consider
A lifetime mortgage isn’t right for everyone. Before proceeding, you’ll need to consider:
- Whether you want to leave an inheritance
- If staying in your home is your top priority
- Your health, lifestyle, and long-term plans
- Other options, such as downsizing or Retirement Interest Only (RIO) mortgages
It’s also important to understand how interest works on a lifetime mortgage. While monthly payments are not required, interest is usually added to the loan each year (compounding). However, many lenders offer flexible options including voluntary payments or drawdown facilities to help manage the long-term cost.
Final Thoughts
So, let’s bust this myth once and for all:
Yes, it’s possible to release equity if you still have a mortgage.
In many cases, it’s the very reason people turn to a lifetime mortgage in the first place.
As with any financial decision, especially in later life, it’s important to get expert advice and consider all your options carefully.
If you’re approaching the end of your interest-only mortgage and feeling stuck—you’re not alone. A lifetime mortgage might give you the breathing space you need.
Risk Warning: This is a lifetime mortgage. To understand the features and risks, please ask for a personalised illustration. Check that this mortgage will meet your needs if you want to move or sell your home or you want your family to inherit it. If you are in any doubt, seek independent advice.
Symmonds de Lacey is a trading name of Easy Street Financial Services Limited which is authorised and regulated by the Financial Conduct Authority. Easy Street Financial Services Limited is a company registered in England and Wales with company number 6430453. The registered office address is Basepoint, 377-399 London Road, Camberley, Surrey, GU15 3HL.
