Can I pay off equity release early?

Yes. Repaying in full may carry an early repayment charge, and partial repayments are allowed without penalty on every plan meeting Equity Release Council standards since March 2022.

The two kinds of charge

Fixed or defined
Set out at the start and usually tapering over the early years, on a scale the lender chooses. You know the figure in advance.
Gilt-linked
Nothing payable if gilt yields have risen since you took the loan, and a charge if they have fallen, sized to the fall. Typically capped, and the cap varies by lender.
Waived on a move into long-term care
On receipt of a medical practitioner's certificate, where the move is permanent.
Often waived on death
Many plans waive it where the loan is repaid after the borrower dies, though this is a term to check and not a Council standard.

Partial repayments, which are different

Since 28 March 2022 every lifetime mortgage meeting Council standards must allow penalty-free partial repayments. How much you can repay in a year varies between lenders, so ask for the figure on the plan you are being offered.

Choosing not to make them costs you nothing and carries no risk of repossession, which is what separates this from an ordinary mortgage. Making them is the simplest way of stopping the balance compounding.

Choosing not to make a partial repayment costs you nothing, and carries no risk of repossession. That is what separates it from a mortgage.

Related questions

Why is there a charge at all?

The lender priced a fixed rate expecting the loan to run for a long time and funded it accordingly. Repaying early leaves it holding funding it no longer needs.

Can I switch to a better rate?

Sometimes, and it depends on the charge on your existing plan and what is available. It is worth reviewing before you assume you are stuck.

What if I sell the house?

The loan is repaid from the proceeds. Where you are moving to another suitable property you may be able to take the mortgage with you instead, subject to the lender's criteria.

Do partial repayments reduce the interest?

Yes. Interest is charged on the outstanding balance, so reducing the balance reduces everything that compounds on top of it afterwards.

Where this fits

Dig out your plan's early repayment terms before you do anything. They vary enormously and they decide what your options are.

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The adviser for this subject

Mike Chan

Mike Chan

Mortgage Adviser

Advising through Equity & General Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority. Check the firm on the FCA register under number 474163.

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