Can I move home with my existing equity release plan?
MANY homeowners may think they’ve purchased their forever home, however sometimes circumstances and requirements for a home can change as we age.
In fact, research suggests a third of homeowners aged 50 will have moved by the age of 70, over half by 901.
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If you’ve unlocked the equity tied up in your current home but are now considering moving, you may wonder: “Can I move with my existing equity release plan?”
The good news is that it is often possible to move home with an existing plan, but there are important considerations to remember.
Here’s everything you need to know.
What is equity release?
Equity release allows homeowners aged 55 and over to access the wealth built up in their home, known as equity.
Your home must be worth over £70,000 and the amount you can borrow depends on factors such as the value of your property, the age of the youngest homeowner and your needs for the money.
There are two main types of equity release plans, a lifetime mortgage and a home reversion plan.
A lifetime mortgage is a loan secured against your home, and you continue to own 100% of your property.
Home reversion plans involve selling part or all of your home to a provider in exchange for a lump sum or regular payments.
With both plans, you don’t have to repay the money, plus accrued interest, until you die or move into long-term care.
It’s worth noting that the value of your estate will be reduced, and your ability to fund long-term care will be affected.
You must first repay any existing mortgage with the money you release.
If you’ve already got an equity release plan, it’s likely you know whether it’s a lifetime mortgage or home reversion plan, however, you can check your paperwork or speak with an advisor to find out more.
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Moving home with a lifetime mortgage
If you have a lifetime mortgage, moving home is generally possible, but it depends on several factors:
- Portability: Many lifetime mortgages are portable, which means they can be transferred to a new property. However, the new home must meet the lender’s criteria which can include its value, location and conditions such as state of repair.
- Outstanding balance: If the value of your new property is less than your current property, you may need to repay part of the loan. If the new property is more valuable, you may be able to borrow more, but this will depend on the terms of your plan and other lender conditions.
- Early repayment charges: You may face early repayment charges if you decide to move depending on the terms of your agreement. These are usually calculated as a percentage of the loan. However, some plans allow for a “no-penalty” move if you’re moving within certain conditions or timescales.
- Changing circumstances: You will need to provide updated information to confirm you can still meet the lender’s criteria. Your age will have increased since you last took your loan, and the value of your home may have increased too. As you can generally release more the older you are, it could be that you may be able to borrow more if you require it
Moving home with a home reversion plan
Moving home with a home reversion plan can be a bit more complicated.
Because you’ve already sold a portion or all of your home to the provider usually at a much lower rate than market value, you’d have less money to purchase your new home.
- Reversion Providers: Some home reversion plan providers allow you to sell the property and move into a new home, but this depends on the terms of your plan and is subject to the new property meeting the lender’s criteria.
- New Property Valuation: A new valuation of the property you’re moving to will be required. The provider may or may not agree to fund a new arrangement, depending on the new property’s suitability and value.
Considerations before moving
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Carefully check your loan agreement to see if there are any clauses or penalties related to moving home.
You should also factor in the potential costs of moving, including any early repayment charges, legal fees, and other associated costs.
An equity release advisor such as those at Age Partnership is available to discuss your options.
Advice is required before proceeding with equity release, whether you’re taking out a plan for the first time or looking to move home.
Through Age Partnership, initial advice is provided for free and without obligation.
Only if your case is completed would an advice fee of £1,895 be payable. Other lender and solicitor fees may apply
- https://www.ageuk.org.uk/siteassets/documents/policy-positions/housing-and-homes/housing-options-in-later-life-2024.pdf
Age Partnership is a trading name of Age Partnership Limited, which is authorised and regulated by the Financial Conduct Authority. FCA registered number 425432. Company registered in England and Wales No. 5265969. VAT registration number 162 9355 92. Registered address, 2200 Century Way, Thorpe Park, Leeds, LS15 8ZB.