Can I Sell Half My House to the Bank

In the UK, you cannot literally sell half your house to the bank in a traditional sense. However, there are financial products and arrangements that allow homeowners to release equity in their property in return for a lump sum or income. This includes shared ownership schemes, equity release products like lifetime mortgages, or sale and leaseback arrangements. Each option involves giving up a portion of your home’s value but under specific legal and financial terms, not through a direct sale to a bank.

Understanding the differences between these options is key to making the right decision. While they can provide access to money tied up in your home, they also come with long-term implications for ownership, inheritance and flexibility.

Equity Release as an Alternative

The most common method for older homeowners looking to sell part of their home’s value is through equity release. A lifetime mortgage, the most popular form of equity release, allows you to borrow against the value of your home without having to move out. You retain full ownership of the property, and the loan, plus interest, is repaid when you die or move into long-term care.

In contrast, a home reversion scheme involves selling a share of your home, typically between 20 percent and 100 percent, to a provider in exchange for a lump sum or regular payments. In this case, you no longer own the portion sold and will receive less than market value for that share. The provider recoups their share from the eventual sale of the home. You can continue living in the property rent-free until death or permanent care.

These schemes are regulated by the Financial Conduct Authority (FCA) and are typically only available to homeowners aged 55 or over. While they offer a way to access capital, they reduce the amount of equity you or your heirs will receive in the future.

Shared Ownership and Sale of Property Shares

If you are not yet a homeowner and want to buy part of a property with the help of a housing association, shared ownership schemes allow you to buy a percentage of a home and pay rent on the rest. This is aimed at first-time buyers or those with lower incomes.

For existing homeowners, shared ownership is not available as a way of selling part of your home to a bank. Similarly, banks and mortgage lenders do not purchase property shares directly from owners. They offer loans secured on the property, but not ownership stakes.

Some private investment firms offer sale and leaseback or property equity agreements. These involve selling a portion of your home to an investor and continuing to live there, sometimes paying rent on the share you no longer own. These arrangements are less regulated and can be risky if not carefully structured. Banks generally do not engage in these types of agreements with individual homeowners.

Can You Sell Part of Your House to a Friend or Relative?

It is possible to sell a share of your home to another person, such as a family member or investor, provided legal ownership is properly recorded with the Land Registry. This can be done through a tenants-in-common arrangement, where each party owns a defined share. However, this is a private legal transaction and not something banks offer as a product.

If you currently have a mortgage, your lender must approve any change in ownership. Most lenders will not permit a partial sale of the property unless the mortgage is cleared or restructured. The buyer of the share would also need to be added to the title and possibly to the mortgage, which introduces additional complexity.

The Role of Banks and Mortgage Lenders

Banks provide loans secured against your property but do not usually act as equity stakeholders. When you take out a mortgage, the bank has a legal charge over the property, meaning they have rights to recover the debt if repayments are not made. However, you remain the sole owner until the mortgage is paid off or the property is sold.

Banks do not enter into co-ownership agreements or buy shares in properties from individuals. If you are trying to access capital, a bank may offer remortgaging, further advances or equity release through a specialist arm, but this is still a form of lending, not co-purchasing.

Conclusion

You cannot sell half your house to a bank in the traditional sense. If you want to unlock value from your home, options such as equity release or private sale and leaseback arrangements exist, but they come with significant legal and financial consequences. Banks may help you access equity through lending, but they do not become co-owners. Always seek independent legal and financial advice before entering into any agreement that involves selling a share of your property.