Selling your home with equity release can raise important questions about your financial flexibility and future housing plans.

While equity release allows homeowners to access the value tied up in their property, deciding to move afterwards involves specific considerations and potential implications.

From understanding how equity release affects your ability to sell, to exploring whether you can transfer or repay the loan, it’s essential to know your options.

This guide provides clear, impartial information to help you make informed decisions if you’re thinking about selling your home after unlocking its value through an equity release plan.

Can You Sell Your House if You Have an Equity Release Plan?

Yes, you can sell your house if you have an equity release plan, but it depends on the type of plan and your provider's lending criteria and property requirements.

What are the types of plan?

Equity release comes in the form of lifetime mortgages and home reversion plans.

Lifetime mortgage plans that conform to Equity Release Council (ERC) standards¹ are “portable”, meaning the loan can be transferred to a new property, as long as this new property meets the provider's lending criteria.²

Some home reversion plans may also allow you to sell up and take your plan with you to your new home (provided this property meets your reversion company's requirements).³

How Do You Transfer Equity Release to Another Property?

To transfer equity release to another property, there are a few steps to follow.

The process involves:

1. Consulting Your Equity Release Adviser: Speak with your adviser to discuss your intentions, ensure your existing plan is portable, and explore the best options for transferring your plan.
2. Checking Lender Criteria: Ensure the new property meets your lender's requirements, such as property type, value, and condition.
3. Property Valuation: Arrange for a valuation of the new property, which may involve upfront fees.
4. Reviewing Key Facts Illustration (KFI): Your adviser will provide a KFI from the lender, outlining the terms and costs of porting your plan.
5. Receiving Legal Advice: Decide whether you need further legal advice for the transfer process.
6. Partial Repayment (if applicable): If the new property is of lower value, you may need to make a partial repayment to maintain the loan-to-value ratio you and your lender agreed to.
7. Completing the Transfer: Finalise the transfer with your lender and solicitor, ensuring all paperwork is in order.

It's important to know that your new home must be of sufficient value and construction type to support the existing equity release plan.

If approved, the loan and accrued interest are moved to the new property without requiring full repayment.

This process is typically managed with the help of solicitors and financial advisers.

How Does Porting Equity Release Work?

Porting equity release works by transferring your existing equity release plan from your current property to a new one, without repaying the loan in full.

This is permitted by all lifetime mortgage providers sanctioned by the ERC, provided the new property meets certain criteria—usually relating to value, location, and construction type.

Once the sale of the original home is completed, the lender uses the proceeds to re-secure the loan against the new property.

If the new home is of lower value, you may need to repay part of the loan to maintain acceptable loan-to-value ratios.

Why port?

Porting avoids early repayment charges and can be a flexible option if you wish to downsize or relocate while retaining your equity release plan.

Are There Alternatives to Porting?

When considering alternatives to porting your equity release plan, repaying your existing equity release loan in full upon the sale of your home is a viable option.

This may appeal to individuals who prefer a fresh start financially or wish to reassess their options before committing to a new agreement.

However, significant early repayment charges might apply, so it’s worth reviewing the terms of your current plan carefully.

What about getting a new loan?

Another alternative is to take out a new equity release plan on your new property.

This route allows you to choose a plan that better suits your updated circumstances, be they adapting to a different financial situation or selecting a product with enhanced flexibility.

You would need to meet the lender's criteria for the new plan, and your new property would have to be deemed eligible for equity release.

In short

Both alternatives offer opportunities to make adjustments based on your changing needs or preferences, but it’s important to consult a qualified equity release adviser to fully understand the implications, including costs, eligibility, and any potential restrictions.

They can guide you towards the most suitable option for your individual circumstances.

Can You Rent Out Your House if You Have Equity Release on It?

Yes, you can rent out your house if you have equity release in the UK, but there are specific conditions and restrictions depending on your lender.

Most equity release lenders allow you to rent out part of your property informally to lodgers, as long as you continue living in the house.

However, renting out the property formally to tenants may require special approval.

If you plan to rent out an annexe or a self-contained part of your property, additional criteria may apply, such as ensuring the annexe has through-access to the main property.⁴

It's essential to consult your equity release provider to understand their rules and obtain consent before renting out your property.

Always check your plan’s conditions and seek written consent from your lender before proceeding.

What Kind of Equity Release Plan Should You Look For?

The kind of equity release plan you should look for depends on your future plans, financial needs, and lifestyle preferences.

For flexibility, consider a lifetime mortgage with “porting” features, which allow you to move home later.

Look for plans approved by the Equity Release Council, which include protections such as the No Negative Equity guarantee.

Flexible drawdown options can be useful for managing interest by only borrowing as needed, and plans that permit voluntary repayments without early repayment charges offer additional control.

If you anticipate downsizing, choose a plan with downsizing protection.

Independent financial advice is essential in selecting a plan tailored to your long-term goals.

Benefits of Selling a Home With Equity Release

Benefits of selling a home with equity release include flexibility for those looking to move closer to family or into more suitable accommodation.

More specifically, the following advantages may apply:

• The ability to relocate, downsize, or adapt your living arrangements while managing your financial obligations.
• If your equity release plan is portable, as all ERC-approved lifetime mortgages are (provided your new home meets your lender's criteria), you can move without repaying the loan in full.
• Selling may help release further capital if your property has increased in value.

Drawbacks to Selling a Home With Equity Release

Drawbacks to selling a home with equity release include the potential costs.

A quick look at the possible downsides:

• Potential early repayment charges, meaning that if your plan is not portable or your new home is not approved, you may have to repay the loan in full. If property values have fallen or the loan has accrued significant interest, you may be left with little equity after repayment.
• Restrictions on acceptable new properties and the need for provider approval, which can limit your options or force compromises on your next home.
• The process can involve legal and administrative complexities that may prolong the selling process.

These factors should be weighed against your goals and discussed with a qualified adviser.

Is Selling Your Home With Equity Release a Good Idea?

Selling your home with equity release may be a good idea depending on what your needs are.

To determine if selling your house is a good idea after taking out an equity release plan, you can follow a number of steps.

These are:

• Consult Your Equity Release Provider: Start by contacting your lender to understand the terms of your plan, including any early repayment charges (ERCs) or conditions for selling your property.
• Speak with a Financial Adviser: A qualified equity release adviser can help you assess the financial implications of selling your home, including how it aligns with your long-term goals.
• Review Your Current Financial Situation: Consider your current financial needs and whether selling your home will provide the funds or flexibility you require.
• Evaluate Property Market Conditions: Research the housing market to determine if it’s a favourable time to sell and whether you’re likely to achieve a good price for your property.
• Explore Alternatives: Assess other options, such as porting your equity release plan to a new property or downsizing, to see if they might better suit your needs.
• Understand the Costs: Factor in all costs associated with selling your home, including estate agent fees, legal fees, and any penalties for repaying your equity release loan early.
• Consider Your Future Housing Needs: Think about where you’ll live after selling your home and whether the new property will meet your lifestyle and financial requirements.

Common Questions

Conclusion

Selling a house with an equity release plan is possible, but it comes with important financial considerations.

Whether you choose to repay the loan upon selling or port your equity release to a new home, it’s crucial to understand the terms set by your provider.

Before making any decisions, consult with your equity release provider or a qualified financial adviser to explore the best options for your situation and to discuss the possibility of early repayment charges.

With the right guidance, you can make an informed decision on selling your home with equity release.