Can I sell my house if I have equity release? | Equity release is a common solution for homeowners aged 55 and over in the UK to access money tied up in their homes. It allows you to raise funds without selling your property or moving elsewhere. However, circumstances can change, and you might want or need to sell your property later.
The good news is that selling your home after releasing equity is possible. However, several important factors need careful consideration before moving forward.
What is Equity Release?
Equity release allows eligible homeowners to access a portion of the value built up in their property. You can receive a lump sum, regular payments, or a combination of both. You continue living in the property without needing to make repayments during your lifetime.
There are two main types of equity release products:
- A lifetime mortgage is the most popular form of equity release in the UK.
- You retain full ownership of your home.
- Interest accrues on the loan, and repayment happens when you die or move into long-term care.
2. Home Reversion Plan
- You sell part or all of your property to a provider in exchange for a lump sum or regular payments.
- You retain the right to live rent-free in the property until death or permanent care.
Can You Sell Your Home If You Have Equity Release?
Yes, you can sell your home even if you have taken out an equity release plan. However, the process depends on the type of equity release you have agreed to.
Selling with a Lifetime Mortgage
You are free to sell your property at any time with a lifetime mortgage in place. The loan and any accumulated interest must be repaid at the point of sale. Some lifetime mortgages offer “downsizing protection,” meaning you can move without penalties under certain conditions.
Selling with a Home Reversion Plan
If you have entered into a home reversion plan, the provider owns a share or all of your home. Upon sale, the provider receives their agreed share of the sale proceeds. If you want to buy back the share, you will need to negotiate directly with the provider.
Can I Sell My House if I Have Equity Release? | Key Considerations Before Selling
While it is possible to sell your property, several important points need careful attention:
1. Early Repayment Charges
Some equity release products include early repayment charges (ERCs). These apply if you repay the plan earlier than agreed, which includes selling the property. Always check your agreement for any potential penalties.
2. Downsizing Protection
Certain lifetime mortgage plans offer downsizing protection. If applicable, you might avoid early repayment charges when moving to a smaller, lower-value property. Review your plan’s terms to confirm whether you qualify.
3. Professional Financial Advice
Selling a property linked to equity release is complex. Consulting a qualified mortgage adviser with equity release experience is essential. They can help you understand your rights, responsibilities, and the full financial implications.
4. Equity Release Council Standards
Choosing a plan from a provider who adheres to Equity Release Council standards offers stronger protection. The Council’s rules ensure fair treatment, transparency, and consumer safeguards, giving you added reassurance during the process.
5. Moving into Long-Term Care
If you move permanently into long-term care, the provider will expect repayment of the loan. This usually happens through the sale of your property. Ensure your family members and legal representatives are aware of these requirements.
Can You Stay in Your Home After Selling?
Some arrangements allow you to remain in your property after a partial sale, depending on the terms. Lifetime leases, for example, can enable you to stay rent-free until you pass away or move into care. This option can provide both security and flexibility during later life.
Pros and Cons of Selling with Equity Release
Pros:
- Financial Flexibility: You can move, downsize, or change your location if needed.
- Retain Control: You are not locked into staying in one property indefinitely.
- Plan Features: Downsizing protection and portable mortgages can ease the selling process.
Cons:
- Possible Charges: Early repayment penalties can be costly if downsizing protection is not available.
- Paperwork: Selling involves additional steps and coordination with your equity release provider.
- Future Borrowing: Settling the plan could affect your eligibility for a new mortgage.
How Premier Equity Release Can Help
At Premier Equity Release, we recognise that personal circumstances change over time. Whether you’re looking to relocate, downsize, or reassess your financial situation, we can help you move forward with confidence.
Our advisers will:
- Review your current equity release arrangement.
- Explain what selling your property involves.
- Explore all options to find the right solution for your new goals.
We ensure that you understand every step before making any commitment.
Contact Premier Equity Release today to arrange a no-obligation consultation with one of our specialists. We are here to support you with straightforward, professional advice tailored to your needs.
Important Notes
Selling your home when you have an equity release plan is possible, but careful planning is essential. Review your agreement’s terms in detail. Always consult a qualified adviser who understands the complexities of equity release.
Choosing a provider who follows Equity Release Council standards will ensure you benefit from greater protection. Your home and your future deserve thorough, professional care.
Richard Turner is one of those members.
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