How it works with an existing loan · Updated 17 October 2026
This page is general information, not financial advice. Safe Haven Equity is an introducer service. Equity release is a major decision, and you should take advice from a qualified, FCA-regulated adviser before going ahead.
Yes, in many cases you can. You do not need to own your home outright to take out equity release. What you do need is enough equity, because your existing mortgage has to be paid off when the new plan starts, and that usually comes out of the money you release.
It is a common reason people look at equity release. In the Equity Release Council’s latest adviser survey, 26% of advisers said customers were using equity release to clear existing mortgage balances. This guide explains how it works, what it could cost, and what to check first.
New to equity release? Start with our guide, What Is Equity Release?
A lifetime mortgage has to be the only loan secured against your home. So when your plan completes:
The usual rules still apply. You need to be 55 or over (if you are borrowing jointly, the youngest of you counts), the property must be your main home, and it has to meet the lender’s criteria.
This is the key question. How much you can borrow depends mainly on your age and your home’s value: the older the youngest borrower is, the bigger the share of the home’s value a lender will usually offer. Some lenders will also offer more if you have certain health or lifestyle conditions.
If the most you can borrow is less than you owe on your current mortgage, a lifetime mortgage on its own will not work. You would need to pay the difference from savings or other money, or look at one of the alternatives below.
The figures below are made up to show how the sums fit together. They are not a quote, and the amount you could borrow will depend on your age, home and lender.
| Step | Amount |
|---|---|
| Home value | £250,000 |
| Most you could borrow with a lifetime mortgage (illustration only) | £80,000 |
| Existing mortgage paid off at completion | £45,000 |
| Early repayment charge on old mortgage (none in this example) | £0 |
| Left for you, before fees | £35,000 |
In this example the homeowner clears their mortgage, has no monthly mortgage payment to make, and still has £35,000 to use. But the full £80,000 is now borrowed, and interest builds up on all of it, not just the £35,000 they spend. You only have to borrow what you need, so taking less, or using a drawdown plan, can keep the cost down.
If you can afford something each month but not your full mortgage payment, it is worth asking about plans that let you pay some or all of the interest. Paying some interest slows down how fast the loan grows, and paying all of it stops the loan growing at all. Plans that meet Equity Release Council standards also let you make penalty-free partial repayments, within limits set by the lender.
It still comes with the same trade-offs as any equity release plan. Our guide, Is Equity Release a Good Idea?, sets out the pros and cons in full.
Yes, in many cases. A lifetime mortgage has to be the only loan secured on your home, so your existing mortgage is paid off when the plan completes, usually using part of the money you release. You need enough equity for the lifetime mortgage to clear it.
Your solicitor uses the money from the lifetime mortgage to pay off your existing mortgage, and any other loans secured on your home, on the day the plan completes. Anything left over is paid to you.
You might. If your existing mortgage is still in a fixed or discounted deal, your current lender may charge an early repayment charge when it is paid off. Check your mortgage paperwork or ask your lender before you apply.
Then a lifetime mortgage on its own will not work, unless you can pay the difference from savings or other money. An adviser can look at other options, such as a retirement interest-only mortgage, a longer mortgage term or downsizing.
Not on a standard lifetime mortgage. The interest is added to the loan instead. Some plans let you pay some or all of the interest each month, which slows down or stops the debt growing.
Make a no-obligation enquiry and we will introduce you to a qualified adviser who can look at your mortgage, your circumstances and the alternatives.
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