Can I sell my house if I have equity release?
Yes, you can sell your house if you have equity release, as the loan can be paid off at any time. However, depending on the terms of your plan, you may face early repayment charges which can be quite expensive.
A lifetime mortgage, which is the most popular type of equity release is essentially designed for life, as the loan is only repaid once you have died or moved into permanent care. Having said that these days plans offer greater flexibility, giving homeowners the freedom to move home if they wish.
So, if you’re considering moving house with equity release, or you are interested in a lifetime mortgage but may want the flexibility to move or downsize at a later date, options are available.
Can you move house if you have equity release?
One of the Equity Release Council’s five product standards is that members must give customers the right to move home, subject to their approval of the new property. So as long as your new home is within your providers lending criteria, you should be able to transfer your plan to a new property.
Alternatively, if you have a lifetime mortgage and are looking to move home, you could pay off your existing plan and get a new one on the property you intend to move to.
Should I transfer my equity release to a new property?
Whether it is better to transfer your equity release plan to a new property or arrange another one will depend on your personal situation. There are pros and cons for each option, so getting advice from a specialist adviser will help you choose the best option for you.
Here’s more on how each option works:
Transferring equity release to a new property
Transferring equity release to a new property can have its benefits. If you are happy with your existing lender there is no change, the process tends to be cheaper than arranging a new lifetime mortgage and unless you choose to, you don’t have to pay for legal advice.
The disadvantage of transferring your plan to a new property is you will have to pay a non-refundable valuation fee, plus there may be additional costs for the transfer.
Moving house with equity release already in place may also mean you don’t get the best deal. It is unlikely that your interest rates will remain the same once you move the plan and it’s possible that any timeframes around early repayment charges may be reset.
Taking out a new equity release plan when moving home
Paying off your existing lifetime mortgage and arranging a new one on the property you are moving to means you can compare the market for the best deals. A new plan may also offer greater flexibility and include things like a free valuation to cut down on costs.
However, you will still incur costs when arranging a new lifetime mortgage for professional advice and the services of a solicitor. And in addition, you may face hefty early repayment charges for paying off your current plan.
Why wouldn’t I be able to transfer my equity release to a new property?
You may face problems transferring equity release to a new property if its value is lower than your current home. Some providers will not lend against properties that are lower in price whereas others may want you to pay back some of the loan from the proceeds of the sale.
In addition, your provider won’t allow the transfer your current equity release mortgage if your new property doesn’t adhere to their lending criteria. For example, companies may not lend against retirement flats, park homes, some leasehold properties and buildings of non-standard construction.
Selling your home with equity release – 6 top tips
If you are considering selling your home with equity release or thinking about getting a lifetime mortgage that gives you freedom to move, here are our top tips:
- Get specialist advice when reviewing your options – this doesn’t have to incur any costs as many advisers offer their initial advice for free.
- Check for early repayment charges – as some lifetime mortgages let you repay the loan without charge after a number of years.
- Understand the terms and conditions and costs – explore all the pros and cons of equity release and get a projection of costs over the life of the mortgage.
- Consider downsizing protection – which allows you the freedom to downsize without facing early repayment charges.
- Only use Equity Release Council members – to ensure you are protected by their standards and safeguards such as the ‘freedom to move home’ and the ‘no negative equity guarantee’.
- Consider the alternatives to equity release – to understand if there is a better option available
For more information about equity release, read our helpful guide.
Or use our equity release calculator to see in seconds how much money you could release from your home.