Can I Sell My House if I Have Equity Release?

Equity release has long been placed in a negative light as a less than desirable financial solution that ties you to your home indefinitely. Thankfully, today plans are far more flexible than most realise and equity release mortgages are rising in popularity.

Whether you’re exploring equity release for the first time or already have a plan in place, you might be asking: Can I sell my house if I have equity release?

The simple answer is yes, however, the route you take will depend on the type of plan you hold, your provider, and your future goals.

In this article, we’ll cover how equity release affects your ability to sell, your options for moving or porting, and what alternatives like downsizing might offer. Let’s begin.

Definition of Equity Release

Equity release allows homeowners – aged 55 or over – to unlock value from their home without needing to sell or move out. The released funds can be taken as a lump sum, regular income, or both, and the loan is typically repaid upon death or a permanent move into long-term care.

There are two main types of equity release mortgages:

• Lifetime Mortgage

A loan secured against your home. You retain ownership, and the balance (plus interest) is repaid from your estate.

• Home Reversion Plan

You sell all or part of your property to a provider in return for a lump sum or regular payments, while continuing to live there rent-free.

Plans offered by providers who are members of the Equity Release Council include safeguards, such as the no negative equity guarantee and the right to remain in your home for life.

How Selling a Home with Equity Release Works

If you’re considering selling a home tied to an equity release mortgage, it’s natural to wonder what that process actually involves.

For lifetime mortgage holders, it’s usually possible to repay the loan from the proceeds of the property sale. Alternatively, your chosen provider may allow you to port your mortgage plan to a new property, provided it meets their set criteria. Crucially, it’s important to keep in mind that early repayment charges may apply and so it’s always best practice to check your mortgage plan policy.

Home reversion plans introduce additional complexity. Because part of the home has already been sold to a provider, you’ll need their permission to sell, and the proceeds will be divided in line with their share.

A common question we receive from equity release clients is: “can you lose your house with equity release?”

Assessing the risks is important with any mortgage product, but with equity release, regulated providers must offer safeguards like the no negative equity guarantee. This means you will not be allowed to owe more than your home’s value or risk losing it under normal circumstances.

As long as you comply with the agreement’s terms, you’ll retain the right to live in your home for life or until long-term care is required.

Moving with an Equity Release Plan in Place

A common misconception is that equity release locks you into your current home for good. This is simply not the case.

Most equity release providers today now allow for flexibility with your mortgage needs – especially if they’re members of the Equity Release Council.

If you’re planning on releasing equity to buy another property or to move home, and that new property meets the lender’s criteria – such as property value, construction type, and location – you may be able to port your existing plan and continue as before.

That being said, if the new property does not pass your chosen lender’s eligibility, the loan will need to be repaid in full, with the possibility of early repayment charges.

That’s why it’s essential to speak with a trusted mortgage adviser – like Boon Brokers – well in advance of any planned move. An expert adviser will be able to assess whether your new property is eligible under your current plan, flag any potential charges or limitations, and guide you through the process.

How Does Porting Equity Release Work?

If you’ve run into the phrase ‘Porting your mortgage’ and simply don’t know what that means – don’t worry, we’ve got you covered.

Porting refers to the act of transferring your existing mortgage – in this case equity release plan –  to a new property. Most providers will allow for this, but each lender will have their own specific conditions that will need to be met.

Here’s how the process typically unfolds:

1. Find a new property that meets your needs.
2. Notify your lender of your intention to move.
3. Your provider assesses the new home to ensure it meets their eligibility criteria.
4. If approved, the equity release loan is moved to the new property under the same terms.

In the case that your mortgage port request is not approved, you will likely need to repay the loan in full before taking out a new plan.

In some cases, especially when downsizing, the loan amount that can be ported may be lower, and you’ll be required to repay the shortfall using the proceeds from the property sale.

Are There Alternatives to Porting?

Yes, porting a mortgage is not the only way. In fact, if your provider won’t approve a port or if you’d prefer a different route, you have several alternatives you can consider, including:

• Full repayment

Use the proceeds from your home sale to clear the loan. Some plans impose an early repayment charge, but many include downsizing protection to reduce or eliminate this.

• Switching products

You may qualify for a more flexible or competitive plan – especially if interest rates or features have improved since you first took out equity release.

• Partial repayments

Some plans let you repay a portion of the loan over time without penalties, reducing the balance ahead of a potential sale.

In truth, choosing the right path depends on your personal financial profile and goals for the future, as well as the nitty gritty specifics of your current agreement. Talking with a trusted mortgage adviser can help you work out untangle all of the options available to you, giving you the clarity to move forward with confidence.

Types of Equity Release Plans

As noted earlier in the Definition of Equity Release section, there are two core types of equity release: lifetime mortgages and home reversion plans.

Depending on the type of equity release plan you choose, there are variations in product features that directly influence your flexibility when selling or moving home.

Can I Sell My Property with a Lifetime Mortgage or a Home Reversion Plan?

With a lifetime mortgage, you remain the legal owner of your home. This means you can usually sell your property and either repay the loan or port it to a new home if that property meets your lender’s porting criteria.

But how does a lifetime mortgage work in practice?

A lifetime mortgage is essentially a loan secured against your property, with no mandatory repayments during your lifetime. Instead, interest will incur over time and the full amount will typically be repaid when the property is sold – either when you move into long-term care or pass away.

Many modern lifetime mortgage plans will include benefit features, such as:

• Voluntary repayments

This allows you to pay off part of your loan whenever it suits you, often without incurring penalties. It’s a flexible way to manage the overall debt and interest build-up. This benefit is especially useful if you’re concerned about increasing your overall equity in order to leave a sizable inheritance.

• Drawdown facilities

This is a structured add on plan that allows borrowers to take more control of their finance. Instead of taking your full loan amount upfront, a drawdown plan lets you release smaller amounts as and when needed. Interest only accrues on the funds you’ve actually accessed, which can significantly reduce the long-term cost of borrowing while giving you a financial buffer for the future.

• Downsizing protection

This feature allows you to repay your plan without early repayment charges if you sell your home and move to a property that isn’t accepted by your lender.

In contrast, a home reversion plan will involve selling part – or all – of your property to the provider. At this point, they are legally co-owners and so their approval is required if you plan to sell your house with a home reversion plan.

If you sell your property while under a home reversion plan, you’ll only receive the portion of the proceeds that reflects the share of the home you still own. Additionally, these plans typically can’t be transferred to a new property, which means relocating under a home reversion agreement is rarely possible.

As such, if you’re looking into long-term planning and flexibility, a lifetime mortgage generally provides more options.

What Is Downsizing?

Downsizing, as the name suggests, involves selling your current home and moving to a less expensive property, often to release equity, reduce overheads, or simplify life in retirement.

But what’s best, downsize or equity release?

For those exploring whether to downsize or take out an equity release plan as competing options, downsizing is sometimes seen as the more straightforward route – especially if you wish to avoid borrowing debt. Notably, it can also support family relocation or access to care by freeing up funds in a debt-free way.

However, downsizing isn’t always practical or emotionally appealing. In high-demand areas, finding a suitable smaller home can be a challenge. Plus, moving costs, legal fees, and leaving a long-standing home can be major considerations.

If your goal is to release equity to buy another property, a lifetime equity release plan may still offer the best path without forcing a move to a smaller home.

How Does Downsizing Protection Work?

You may have noticed that we’ve mentioned Downsizing Protection throughout this article, and here’s why:

Equity release downsizing protection is a valuable feature included in many modern lifetime mortgage plans. It allows you to repay your loan early, without incurring a penalty, if you decide to move to a property that your lender won’t accept under the plan.

This protection typically applies after a qualifying period (often 5 years) and is especially helpful if you think you might relocate or downsize in later retirement.

Not all plans offer this feature, and so it’s worth reviewing your existing agreement or speaking with an adviser about switching to a plan that does.

Get in Touch with an Equity Release Expert

Selling or moving home with equity release is no longer the hurdle it once was – but it does require careful consideration.

Navigating a home sale or move while managing an equity release plan can feel overwhelming, especially with complex terms and even more mortgage jargon comes into play.

But don’t worry – we’re here to help you.

At Boon Brokers, we specialise in providing fee-free expert mortgage advice that is tailored to your unique circumstances. Whether you’re exploring porting, downsizing, or looking to repay your plan, our qualified mortgage advisers can help you assess every option and make the move that’s right for you.

Contact Boon Brokers today for clear and impartial guidance, tailored to your needs.