Can I Sell My House if I Have Equity Release? Quick Answer

Are you wondering whether you can sell your house if you have equity release? This article will answer your question in simple, easy-to-understand words. We know that equity release can be confusing. You might worry about what happens to your house or if you can sell it, but don’t worry; we’re here to help.

Each month, more than 7,000 people visit our website to learn about equity release. Our team has many years of experience explaining equity release in a way that’s easy to understand.

In this article, we’ll tell you about:

• What equity release is and how it works.
• The different types of equity release schemes.
• How selling your house can affect your equity release.
• The role of the Equity Release Council.
• What to think about if you’re considering equity release.

We understand your worries. We know that your house is important to you, and you want to make the right choice, which is why we’re here ‚Äì to guide you through this process.

Let’s dive in.

A simple explanation of equity release

Equity release is available to outright homeowners over 55 years old. They can release some of the equity in their home as a cash lump sum or drawdown facility without needing to make principal or interest repayments. Instead, the loan is repaid when the house is sold after the last surviving homeowner dies, or if they need to move into long-term residential care. 

Do you still own your house with equity release?

You are still the 100% owner of your home if you take out a lifetime mortgage. The money you received is a loan against your property that you will repay, and therefore ownership has not changed hands. However, with a home reversion scheme, you are giving up ownership of a percentage of your home. You’ll still own your home, but you’ll own it along with your lender. 

Can you sell your house if you have equity release?

The simple answer is yes. But things aren’t quite that simple. 

It is possible to sell your house and move to another property when you have already taken out an equity release plan. If you have a lifetime mortgage or home reversion scheme through an equity release provider that is a member of the Equity Release Council, they should agree to allow you to move to a ‚Äòsuitable alternative property’.

The equity release provider will need to deem the new property you move to as suitable in the same way they assessed your current residence. If the property is of the same or higher value without foreseen issues selling it on in the future, then there should be no issues. The lender can simply switch your current lifetime mortgage to the new property. This is officially known as porting. 

However, if you want to downsize to a smaller or possibly less valuable property, then you may have to pay some of your equity release plan off earlier, which may also trigger early repayment charges. You may be able to avoid these fees by asking for a downsizing clause or downsizing protection to be included in your equity release plan. 

Some properties you may want to move to may be difficult to sell in an open market, such as Airbnbs, boathouses, mobile homes or static homes. This may not be considered as a suitable alternative property and your lender could deny your request. If you have plans to move to any of these property types, you should let your financial adviser know from the start. 

Can you lose your home with equity release?

Equity release schemes from members of the Equity Release Council ensure your home cannot be repossessed in normal situations. Your home will always be yours without having to pay rent or face the threat of eviction. It must only be sold if you go into long-term residential care or after you die.

Even after death, some equity release providers will allow the estate beneficiaries to keep the home if they pay off the debt. This may be preferable if the home has sentimental value or may be used by one of the beneficiaries. 

Alternatives to porting

It’s essential that you consult with a financial adviser or mortgage expert when you are considering selling your home and moving with an existing equity release plan. Just as you sourced advice when you first took out the loan, the same is required now. 

In some situations, the adviser may recommend an alternative strategy to porting, such as paying off your current plan and getting a new one on another property. They should account for all fees and charges to identify the cost-effective option. But this process would take longer. 

Equity release and moving house – quick recap! 

Members of the Equity Release Council must allow you to move house if the new home is a suitable alternative, meaning of similar value and just as easy for the lender to sell on in the future. Some unique properties are difficult to sell and can be excluded from this, such as boat homes or remote farmhouses. 

If you decide to move to a suitable alternative after taking out an equity release plan, you can take your plan to the new property in a process known as porting. 

But if you downsize or move to a less valuable home, equity release providers will ask you to pay off some of your plan first, which could trigger early repayment fees if you do not have a downsizing clause in the agreement. 

Read more guides all about equity release plans!

We have answered plenty more frequently asked questions about equity release plans on the MoneyNerd blog. 

If you want to know about equity release and its relation to inheritance tax, means-tested benefits, interest rates or just the overall benefits and risks – we have content for you. All of our guides are free and written to keep you in the know.