Can You Move Home If You Have Equity Release? | If you have released value from your property through equity release, you might wonder whether moving home is possible. The good news? In many cases, it is — but there are essential things you must understand before making plans. This guide focuses on lifetime mortgages, the most common form of equity release available today.
There is also home reversion, where you sell a share of your home instead of taking a loan against it. Today, we will concentrate only on how lifetime mortgages work when moving home with an existing plan.
What Does ‘Porting’ Your Lifetime Mortgage Mean?
In equity release, transferring your plan to a new property is referred to as ‘porting’. Although porting may sound simple, the process often resembles starting over with arranging an equity release again from the beginning.
You must speak to an equity release adviser as your first step when considering moving home with a plan. They will assess your circumstances, discuss your goals, and help determine the most suitable course of action.
Depending on the type of property you are buying, porting may be possible, or a new plan may be advised. Your adviser will provide a Key Facts Illustration (KFI) that clearly outlines the full details of your options.
Key Differences When Moving Home with Equity Release
Transferring your equity release to another property is typically similar to arranging equity release when you first applied. It is essential to seek financial advice, so your first step should be to contact a qualified equity release adviser. They will assess your intentions carefully and help you find the most suitable way to proceed with your plans.
The construction type and specific features of your new property must meet the lender’s requirements for available equity release plans. Always consult your adviser before making any financial commitment to purchasing a particular property. Your adviser may suggest porting your existing equity release plan or arranging an entirely new lifetime mortgage agreement. Regardless of the option they suggest, your adviser must provide a Key Facts Illustration (KFI) from the proposed lender.
Every lender must issue a KFI using a standard format, although minor design features may differ slightly. The essential points covered in all KFIs remain consistent, ensuring you can easily compare your available options. Should you proceed, it is essential to understand the key differences between porting your existing plan and arranging a new one. Valuation fees – Porting your existing plan typically involves paying for a property valuation upfront, which is non-refundable.
Choosing a new lifetime mortgage often means access to plans offering a free property valuation as part of the deal. Solicitors – When porting, you may choose whether to seek fresh legal advice, which could help you reduce your costs. When taking a new equity release plan, obtaining independent legal advice is compulsory and will add to your overall costs. Always remember these key points when deciding which route offers the best option for your personal circumstances. Also, bear in mind that moving home usually involves other standard costs, including stamp duty and professional removal services.
Should You Port or Start Fresh?
Choosing between porting your lifetime mortgage or taking a new one needs careful consideration and expert guidance.
Costs Over Time:
Your adviser should provide you with a comprehensive cost comparison between porting and starting a new plan over time.
Early Repayment Charges (ERCs):
Repaying your existing plan early could trigger an ERC. Ensure this is included when considering your options.
Interest Rates:
New plans sometimes offer lower rates, but factor in costs like ERCs to calculate your real savings.
Plan Terms:
Porting may not guarantee identical terms. You could face new interest rates or changes to early repayment conditions.
What may initially appear cheaper could prove more expensive after considering all associated fees and penalties.
| Option | Pros | Cons |
|---|---|---|
| Porting | – You are not required to receive further legal advice, which will save you money. – You may be familiar with your existing lender and not wish to change. – The process will likely be quicker. |
– You will likely need to pay an up-front, non-refundable valuation fee. – You may incur additional fees (including covering the lender’s legal costs to transfer the charge). |
| New Equity Release | – You can access the best rates across the market without being tied to your existing plan. – You will be able to access plans which include free property valuations. |
– You may incur an Early Repayment Charge (ERC) from your existing lender for repaying before the natural term-end. – You are required to receive legal advice on your new plan, which will cost money. |
When You Might Not Be Able to Transfer Your Plan
Not every property will meet your current lender’s equity release lending criteria. You should be aware of this:
Challenges might occur if your new home:
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Is built using non-standard construction (such as concrete or timber-framed homes).
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Is a retirement property that has strict age restrictions.
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Has a short lease if the property is leasehold.
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Is in an area with a history of significant flooding.
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Needs major repairs, such as full rewiring or structural renovations.
Due to these risks, it is essential to consult your adviser before making an offer on a new home.
Moving to a Cheaper Property
If you move to a less valuable home, your lender may require partial repayment of the existing loan.
This is because your lender’s security — your home — would decrease in value and affect their risk exposure.
For example, if the new home is worth half as much, you may need to repay half of the loan.
Sale proceeds from your current home usually help cover any required repayment when buying the new property.
What Happens If You Do Not Transfer Your Equity Release?
If porting is not possible, you will usually need to repay your lifetime mortgage upon selling your current home.
This could trigger an Early Repayment Charge (ERC), depending on the terms of your plan and the lender’s conditions.
Some modern lifetime mortgages offer downsizing protection, which means you can repay the loan without penalty when you move to a smaller home.
However, downsizing protection varies between lenders. Always check the individual terms of your lifetime mortgage agreement.
Moving Home with Equity Release
You can usually move home even if you already have an equity release plan in place.
However, the process involves several important steps, decisions, and costs that must be carefully considered.
Speaking to a qualified equity release adviser will help ensure the move is smooth, affordable, and properly managed.
Thinking about moving home with an existing equity release plan? Speak to a specialist adviser today for advice.
If you’re considering equity release and would like advice tailored to your specific needs, please don’t hesitate to contact Richard Turner today. We can help you explore your options, ensuring your home remains yours for the long term.
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