Can you pay back equity release?
10 June 2025
The short answer is yes, equity release can be paid back. But the way this happens and whether any extra charges apply will depend on what kind of plan you have taken out. When you choose to repay the equity release will also affect the charges that will apply.
In this guide, we’ll explain how equity release repayment works, what to expect if you want to pay it off early and what your family or beneficiaries should be aware of when the time comes.
A quick recap: What is equity release?
Equity release is a financial product that enables homeowners aged 55 and over to unlock some of the value tied up in their home without needing to move out or sell. There are two main types of plans available in the UK.
Lifetime mortgages
These are the most common. You borrow money against the value of your home, but you will still own it.
Home reversion plans
With these, you sell part or all of your home to a home reversion provider in exchange for a cash lump sum or regular payments. You will continue to live in the property, but you will no longer own it.
Both types of equity release are usually repaid when the last borrower either passes away or moves into long-term care.
NB: About Mortgages do not provide advice regarding home reversion schemes.
How is equity release repaid?
If you have a lifetime mortgage
With a lifetime mortgage, the loan is typically repaid when the property is eventually sold. This is usually after the borrower passes away or permanently enters care. The total amount to be repaid will include the original loan as well as any interest that has built up over the years.
It is usually the executors of your estate or your family members who will arrange the sale of the property and subsequently repay the lender using the proceeds. If they want to keep the property instead, they would need to repay the outstanding balance by other means, such as a new mortgage or using other funds from elsewhere.
If you have a home reversion plan
With a home reversion plan, you will have sold a percentage of your property to the provider up front. When the property is sold later on, they will receive their share of the sale price. There is no interest to repay with these plans, but the provider may end up owning all or part of the property by the time the plan ends.
Can you pay equity release early?
Yes, it is possible to repay your equity release plan before it naturally comes to an end. But depending on the plan, this might come with an early repayment charge (ERC).
Early repayment on a lifetime mortgage
Many lifetime mortgage providers allow early repayment, but some may charge a fee if you decide to pay off your loan earlier than agreed. This charge can vary a lot between providers.
Some plans only apply early repayment charges for a certain length of time into the agreement; others might apply them for the full duration of the plan. It is a key detail that is worth understanding before you make any decisions.
Early repayment on a home reversion plan
This works a little differently. Because you’ve already sold a share of your home to the provider, repaying it early would usually mean buying back that share. In some cases, moving to a new suitable home might be an option instead. Providers that follow the Equity Release Council’s standards are required to let customers move, as long as the new property meets their criteria.
What happens if your family wants to keep the property?
If your beneficiaries do not want to sell the home after you’ve passed away, they can keep it, as long as they are able to repay the amount owed to the equity release provider.
That could be done by:
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Using other funds from the estate
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Taking out a mortgage in their own name
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Buying the property outright, if financially possible
Once the outstanding balance is settled, the property remains in the family. It is recommended that you speak to an expert regarding the possible stamp duty implications of this.
What If the House Sells for Less Than What’s Owed?
Many people who take out equity release are concerned about what would happen if the house sells for less than what is owed. All equity release plans that follow Equity Release Council guidelines include a "no negative equity guarantee." This means that, as long as the property is sold for a fair market price, your estate or your family will not be left to pay the difference, even if the loan plus interest exceeds the sale price.
Equity release does not mean your options are locked in forever. Whether you want to repay it in full, make partial payments over time or look at what happens when the plan ends, it is good to know there is flexibility built into many of today’s products.
Just keep in mind that different plans come with different rules. Early repayment charges can sometimes be a factor. If you are thinking about paying off your plan early or want to understand your choices better, it is always worth going through your documentation or speaking to a qualified lifetime mortgage adviser such as About Mortgages.