Can I Use Equity Release to Pay Off My Mortgage?
Equity Release will reduce the value of your estate and can affect your eligibility for means-tested benefits.
Equity release can be beneficial in a number of circumstances. It gives homeowners over the age of 55, the opportunity to release a tax-free, lump-sum payment that corresponds to the value of their property. However, the key thing to bear in mind is that any outstanding mortgage payments will be deducted from the amount you can borrow.
You can use equity release to pay off a mortgage early. If you’re looking to pay off your current mortgage, equity release could give you the funds you need to achieve that. It can be used to repay an interest-only mortgage.
If you have a substantial amount left on your mortgage, you may struggle to get a lender. You’ll also want to make sure you have enough equity to pay off your mortgage.
No more monthly repayments
Unlike other mortgage types, with equity release, you don’t have monthly repayments. You typically only pay back the loan after you die or go into permanent care. The money comes from the sale value of your property. No more monthly repayments is a key benefit to using equity release to pay off your mortgage.
Equity release valuations do tend to be lower than estate agent valuations. This means you probably won’t receive as much money as if you were to sell your home. However, it is a way for you to acquire a tax-free, lump sum without the hassle of selling your house.
You’ll still own the property. But, after you pass away it will be sold to pay back your loan. You can also choose to ring-fence a portion of the value such as for inheritance purposes. But again, this will affect the amount you can borrow.
It’s important to seek advice from a professional equity release mortgage broker. Speak to Derngate Wealth Management Northampton to get advice today.