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Clear existing debt

Equity release could be a way to help you take control of your later life finances and pay off existing debts

Debt in retirement

Having large amounts of debt  can severely strain your savings once you retire and can be difficult to pay off.

Even the best-laid retirement plans can be spoiled by existing debt. So it’s good to start your non-work life on a strong financial footing.

While incomes traditionally fall at this time of life, finding the funds to manage monthly payments, as well as doing all the things you want to in later life can be a struggle.

Can you use equity release to pay off existing debt?

Yes you can, there is no minimum or maximum level of debt you need to have to look at equity release as an option.

However, it’s more likely to be suitable for you if you have debts that you cannot afford to pay off using your regular income.

By releasing some equity from your home using a lifetime mortgage, which is a type of equity release, you can use it to pay off debts such as an existing mortgage, balance on credit cards and loans, car finance payments or other loans.

Freeing up your income

With a lifetime mortgage, there are usually no monthly repayments to make. This is because the loan, plus compound interest, is typically repaid through the sale of the property when the last remaining applicant passes away or moves into long-term care.

By paying off your debt with this type of plan, it provides you with the option to not make monthly repayments on your existing debt and free up your day-to-day cash. Although you should always think carefully before securing a loan against your home to repay existing debt.

Lifetime mortgage benefits

Your specialist equity release adviser will explain:

  • You can unlock cash from your home, tax-free, to help meet your needs in later life
  • You’ll always retain full ownership of your home and can stay in it for as long as you wish with a Key lifetime mortgage
  • You can choose to make reduced or no monthly repayments to suit your circumstances
  • You’ll never owe more than your home’s worth with a Key lifetime mortgage
  • You may be able to remortgage your plan in the future to release further funds or secure a better interest rate, although this isn’t guaranteed and may be subject to early repayment charges


Your equity release adviser will also outline the following important things to think about:

  • A lifetime mortgage is a loan secured against your home and subject to compound interest, meaning the amount you owe can grow quickly
  • Equity release will reduce the value of your estate and may affect your entitlement to means-tested benefits
  • Equity release may leave you with limited or no property equity remaining
  • Equity release will reduce your financial options in the future
  • A lifetime mortgage is a long-term financial product and is not designed to be fully repaid until the death or entry into long-term care of the last remaining borrower, otherwise early repayment charges may apply

Things to consider

  • All our equity release advice relates to Key lifetime mortgages only - a loan secured against your home
  • The loan, plus compound interest, is typically repaid through the sale of the property when the last remaining applicant passes away or moves into long-term care
  • Our fixed advice fee of £1,299 is only payable on completion

Is equity release right for you?

Equity release is a way for homeowners aged 55 and over with a property worth £70,000+ to release some of the tax-free cash from their property to spend on a variety of uses. However, it’s not right for everyone.  

At Key, our specialist equity release advisers will discuss your needs and ensure you consider all your financial options, and their expert advice is available over the phone, via video appointment or face-to-face, whichever is right for you.
And, if equity release isn’t right for you, we’ll tell you.

Here to help when you're ready

Use our free calculator

Find out how much tax-free cash you could release from your home now with our equity release calculator

Speak to an adviser

Book an appointment with a specialist equity release adviser at a time that's good for you

Assess your options

Our later life mortgage finder helps you consider your options

Page last updated: Monday 18 March 2024