Can I Move House if I Have Equity Release?

"Are you curious about equity release and whether it allows you to move house? You may have many questions and worries, but rest assured that you're in the right place for answers. This article will clearly explain:

• What equity release is and how it works.
• The factors that can affect your ability to move house.
• The possible risks of equity release.
• How to move house if you have an equity release.
• Why your new property might not be suitable for equity release.

This guide explains the conditions, costs and lender checks that can apply when moving home with equity release.

Together, we’ll navigate the process of equity release and moving house, making it less daunting for you.”

Let’s dive in.

Equity release summarised

Most standard lifetime mortgages start at age 55, but some payment-term lifetime mortgages are available from 50 and require interest payments for an agreed period. Home-reversion minimum ages and all other eligibility rules depend on the provider. Check the youngest applicant’s age and the actual product criteria.

A lifetime mortgage is a loan secured on your home; you retain ownership. Interest that is not paid is added to the balance. The loan is usually settled when the last borrower dies or moves permanently into care, subject to the contract. Required or optional repayments vary by product. Usual final-borrower repayment triggers include:

1. The last surviving homeowner moves out of the property into long-term care
2. The last surviving homeowner passes away

There are two types of equity release plans, namely a home reversion plan and a lifetime mortgage. The latter is more common.

Can I move house If I have equity release?

You may or may not be able to move home if you’ve already taken out an equity release plan. You could be allowed to move residential properties and take the equity release plan with you to be secured by the new property. 

It will depend on:

1. The lender and if they’re a member of the Equity Release Council
2. The property you’re moving to
3. Or your willingness and ability to pay off the equity release plan first

Porting may be possible if the new property meets the provider’s current criteria. A cheaper property may be accepted with partial repayment, while equal or higher value does not guarantee acceptance.

Council standards provide a conditional right to move to an acceptable property. Check the actual plan, valuation, repayment requirements and fees.

If you’re not allowed to move home and add the equity release plan to the new property, you could still move home but you would have to pay off the equity release plan first. This can be expensive and may come with additional early repayment charges. Thus, it’s not a realistic solution for many. 

Can you downsize if you have an equity release?

It’s possible to downsize to a less valuable property and take your equity release plan with you, but you might be required to pay off some of the loans in the process. 

A downsizing-protection clause may waive charges only when its conditions and any qualifying period are met.

This is why it’s important to tell your equity release adviser that you have plans to downsize in the future at the very beginning. With this information, they could recommend only considering equity release products that include a downsizing clause. 

How do I transfer my equity release to another property?

Porting your equity release plan to the new property follows a similar process to taking out equity release the first time around. You’ll receive advice from an equity release adviser and the new property will be subject to an evaluation and appraisal. 

Valuation, legal, adviser and administration costs vary, as does payment timing. Obtain a written quote before committing. See related guidance.

There is potential for the equity release adviser to suggest you pay off the plan before purchasing the new property, and then take out a new equity release plan – if possible. 

Why wouldn’t I be able to transfer my equity release to a new property?

There are a number of reasons why an equity release company will deem the new property unsuitable for an equity release transfer, such as:

1. The new property has a non-standard construction
2. The new property is aged restricted (e.g. over 50s building)
3. Leaseholds with short remaining leases
4. The new property is at risk of flooding
5. The new property needs renovations to be liveable 

What happens to my equity release if I don’t transfer it to another property?

A sale or permanent move normally requires repayment unless an approved transfer or other contractual arrangement applies. Confirm the redemption amount and any charge exemptions.