Maximise Your Equity Release: How Small Repayments Can Save You Tens of Thousands | In 2023, equity release borrowers voluntarily repaid a record £120 million, up from £102 million in 2022. This trend reveals a key point—small, regular repayments can lead to substantial savings over time. Figures from the Equity Release Council (ERC) show that average repayments rose by 30%, from £538 in 2022 to £697 in 2023. Over 20 years, this change alone could save borrowers an estimated £169 million in interest.
At Connect Lifetime Mortgages, we explain how voluntary repayments work, how they reduce interest, and whether equity release suits your needs.
Voluntary Repayments on Equity Release Plans
Equity release lets homeowners aged 55 or older access tax-free cash from their home, without having to move. The most common product is a lifetime mortgage. This allows you to borrow against your property while continuing to live there.
The loan is repaid when you pass away or enter long-term care. Unlike standard mortgages, lifetime mortgages don’t require monthly payments. However, interest compounds over time, increasing the amount you owe.
Many lifetime mortgage plans now allow you to make voluntary, penalty-free repayments. These can reduce the effect of compounding interest and lower your final balance significantly.
Thanks to ERC standards, most plans let you repay up to 8–15% of the original loan each year without any charges. You can pay when it suits you, offering control over how much interest accrues.
How Much Could You Save?
The ERC looked at a typical £60,000 drawdown lifetime mortgage and the effect of making small repayments:
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£100/month: saves nearly £17,000 over 10 years and £50,000 over 20 years
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£200/month: saves about £34,000 over 10 years and nearly £99,000 over 20 years
These examples use a 6.57% interest rate—the average for new plans in late 2023. The figures show that small changes can lead to large savings.
| Repaying £100 per month | Repaying £200 per month | Repaying £700 per year | Repaying £1,400 per year | |
| Savings over 10 years | £16,905 | £33,810 | £10,216 | £20,431 |
| Savings over 20 years | £49,456 | £98,912 | £29,886 | £59,773 |
“Small repayment habits add up to significant savings over time,” says Jim Boyd, CEO of the ERC. “They give customers more flexibility and a better chance of leaving behind a financial legacy.”
Is Equity Release Suitable for You?
Benefits:
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Access part of your home’s value without selling
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Stay in your home and maintain ownership
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Use the funds for retirement, care costs, or debt repayment
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Make voluntary repayments if and when it suits you
Points to Consider:
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If you make no repayments, interest builds quickly
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The loan may reduce the value of your estate
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Equity release isn’t suitable for everyone—review every option first
Discuss plans with your family and think carefully about the future impact.
The Role of Professional Equity Release Advice
You must speak to a qualified and regulated adviser before proceeding—this is required by the Financial Conduct Authority (FCA).
Qualified advisers may hold one of the following:
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CeRER – Certificate in Regulated Equity Release
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CER – Certificate in Equity Release (CII)
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ERMAPC – Equity Release Mortgage Advice & Practice Certificate
Advisers not tied to one lender can compare several products to find the right solution for you. Brokers such as Key Later Life Finance, HUB Financial Solutions, and Age Partnership can guide you through the process and offer access to a wide range of plans.
Reduce Costs and Keep More Equity
Equity release can help you access funds later in life, but voluntary repayments offer an effective way to reduce costs. By repaying a portion of your loan, you can manage the impact of interest, protect your equity, and preserve more for future generations.
Taking expert advice and creating a repayment plan tailored to your needs ensures you get the most from your home—while still living in it.
Richard Jeremiah-Clarke, a member of the Equity Release Council, is available to help. Please feel free to contact Richard by clicking the link below.
Thank you for reading our “How Small Repayments Can Save You Tens of Thousands” publication. Stay “Connect“-ed for more updates soon!
