Equity release is a financial product that allows homeowners, typically those who are retired, to access a portion of the value tied up in their property without having to sell it.

This is usually done through schemes such as lifetime mortgages or home reversion plans. One common question among equity release borrowers is whether they can repay their equity release early.

The ability to repay equity release early depends on the type of equity release scheme you have chosen. Let's explore the two main types of equity release schemes and their implications for early repayment.

1. Lifetime Mortgages:

   • Possibility of Early Repayment: Lifetime mortgages, which constitute the majority of equity release plans, often come with the option for early repayment. However, it's essential to check the terms and conditions of your specific plan, as not all lifetime mortgages allow early repayment without incurring penalties.
   • Early Repayment Charges: Some lifetime mortgages may have early repayment charges, especially if you choose to repay the loan before a certain period has elapsed. These charges are designed to compensate the lender for the interest they would have earned over the agreed-upon period. The charges usually decrease over time, so the longer you hold the loan, the lower the early repayment charges.

2. Home Reversion Plans:

   • Repurchase of Shares: In the case of home reversion plans, where you sell a portion or all of your property to the equity release provider, early repayment is typically not an option in the traditional sense. However, some providers may allow you to repurchase the share of your property that you sold to them. The cost of repurchasing will depend on the current market value of the share.
   • Negotiation with Provider: If you wish to repay a home reversion plan early, it's crucial to discuss your intentions with the equity release provider. While they are not obligated to agree to early repayment, some may be willing to negotiate under certain circumstances.

Considerations Before Early Repayment:

• Financial Implications: Before deciding to repay your equity release early, carefully consider the financial implications. Calculate any potential early repayment charges and compare them with the benefits of repaying the loan sooner, such as reduced interest payments.
• Legal and Financial Advice: Seeking professional advice from a financial advisor or legal expert is highly recommended before making any decisions regarding early repayment. They can help you understand the terms of your specific equity release plan and provide guidance on the most cost-effective approach.

In conclusion, the possibility of repaying your equity release  early depends on the type of plan you have and its associated terms and conditions.

While lifetime mortgages often allow for early repayment with certain conditions, home reversion plans may require negotiation with the provider. Regardless of the type of equity release, careful consideration, and professional advice are crucial before making any decisions regarding early repayment.