If you have taken out an equity release product, whether a lifetime mortgage or a home reversion plan, you can still sell your property. The equity release does not lock you into the property permanently. However, the way the sale proceeds interact with the equity release plan, and the costs involved in repaying it on sale, depend on the type of product you have and whether you are selling to move elsewhere or simply to repay the plan.

---

Selling with a Lifetime Mortgage

A lifetime mortgage is a loan secured against your property. When you sell, the loan plus all the accrued compound interest must be repaid from the sale proceeds. The process is similar to repaying any other mortgage on sale: your solicitor requests a redemption figure from the lifetime mortgage lender, which includes the original loan amount plus all interest that has rolled up to the completion date, and this is paid from the sale proceeds on completion day.

The redemption figure can be significant

Because lifetime mortgage interest compounds over time without monthly repayments, the total amount owed can grow considerably. If you took out a lifetime mortgage of 100,000 pounds ten years ago at an interest rate of five percent, the outstanding balance including compound interest would now be approximately 163,000 pounds. The longer the loan has been running and the higher the interest rate, the larger the redemption figure relative to the original loan.

No negative equity guarantee

Most lifetime mortgages from members of the Equity Release Council include a no negative equity guarantee, which means the redemption amount will never exceed the sale proceeds of the property. If the outstanding loan and interest has grown to exceed the property's value, the lender cannot pursue you or your estate for the shortfall. You or your estate will simply receive nothing from the sale proceeds after the loan is repaid.

Early repayment charges

Lifetime mortgages typically include early repayment charges if you repay the loan before a certain event, such as death or entry into long-term care. Repaying through a voluntary house sale may trigger these charges, which can be significant. The charges are usually structured as a percentage of the outstanding balance and reduce over time, often phasing out after a certain number of years. Check the terms of your specific plan to understand what charges would apply.

---

Downsizing and Transferring the Plan

If you are selling in order to move to a smaller or less expensive property, some lifetime mortgage lenders allow you to transfer the plan to the new property rather than repaying it in full, a process called downsizing protection. This avoids the early repayment charge that would otherwise apply.

Downsizing protection is a feature of some but not all lifetime mortgage plans. If it is available on your plan, the new property must meet the lender's criteria, and the outstanding loan must not exceed a percentage of the new property's value. Your equity release adviser or the lender can confirm whether this option is available and what the conditions are.

---

Selling with a Home Reversion Plan

A home reversion plan is different from a lifetime mortgage. Under a home reversion, you have already sold a percentage of the property to the reversion provider. When the property is sold, the provider receives their percentage of the sale proceeds. You receive the remainder, which is your retained percentage of the proceeds.

For example, if you sold 50 percent of the property to the reversion provider and the property is now sold for 350,000 pounds, the provider receives 175,000 pounds and you receive 175,000 pounds. There is no interest to repay because a home reversion is not a loan. However, the amount you receive may be less than you expected if the property has not increased significantly in value, since the provider's original payment to you was lower than 50 percent of the then-market value to account for the deferred nature of their investment.

---

If You Want to Buy Another Property

If you are selling to move to another property, you can either repay the equity release plan fully from the sale proceeds and arrange new finance for the purchase, or, if your plan allows it, transfer it to the new property through downsizing protection. The choice depends on the terms of your plan and whether the new property meets the lender's criteria.

If the sale proceeds after repaying the equity release plan leave you with insufficient funds for the new purchase, you may need to top up with additional equity release on the new property or consider other financing options.

---

Summary

You can sell your home if you have equity release. With a lifetime mortgage, the outstanding loan plus accrued interest is repaid from the sale proceeds on completion. Early repayment charges may apply depending on the plan terms. With a home reversion plan, the provider receives their percentage of the sale proceeds and you receive the remainder. Some plans include downsizing protection that allows transfer to a new property without repayment charges.

Before proceeding with any sale where equity release is involved, contact your equity release provider for a full redemption or settlement figure, and seek advice from a qualified equity release specialist if you are uncertain about the implications.