Can I Sell My House with Equity Release

Yes, you can sell your house if you have taken out an equity release plan. However, the process is more complex than a standard house sale because of the financial agreement tied to your home. Equity release allows homeowners over the age of 55 to unlock the value of their property without having to move out, but if you later decide to sell, you must repay the loan either in full or in line with the terms of the agreement.

This article explains how selling works with equity release, what rules apply, and the key considerations before putting your home on the market.

What is equity release and how does it work?

Equity release is a way for older homeowners to access the cash value tied up in their property. The most common type is a lifetime mortgage, where you borrow money against your home and the loan is repaid when you die or move into long-term care. The other option is a home reversion plan, where you sell part or all of your property to a provider in return for a lump sum or regular income, but continue living there rent-free.

With both types, you retain the right to remain in the property for life. However, if you decide to sell voluntarily before that point, you will need to repay the equity release debt, including any accrued interest.

Can I sell my house after taking equity release?

Yes, but you must inform your equity release provider and follow their terms. If you have a lifetime mortgage, the loan and any interest must be repaid in full from the sale proceeds. If the property sells for more than the loan value, the remaining funds are yours to keep. However, if you are selling early in the mortgage term, you may face early repayment charges.

With a home reversion plan, selling becomes more complicated, as you have already sold part or all of your home to the provider. The property cannot usually be sold on the open market without the provider’s agreement, and they will be entitled to their share of the sale proceeds based on their ownership stake.

Will I have to pay an early repayment charge?

Some lifetime mortgages come with early repayment charges if you sell your home within a set number of years after taking out the plan. These charges can be significant and may reduce your remaining equity. However, many equity release products now include downsizing protection, which allows you to sell your home and repay the loan without penalty if you are moving to a smaller property that the lender will not accept as security.

You should always check the terms of your equity release agreement or speak to your provider to understand any fees or conditions that may apply.

Can I move house with equity release?

Most equity release plans approved by the Equity Release Council include the right to move home, known as portability. This means you can sell your current home and transfer the plan to a new property, provided it meets the lender’s criteria. If the new home is of lower value or considered unsuitable security, you may be required to repay part of the loan.

For example, if your current home is a large detached house and you want to move to a flat or sheltered accommodation, the lender may not agree to port the plan. In that case, you will need to repay the full balance, and any early repayment charges could apply unless you qualify for downsizing protection.

What happens to the sale proceeds?

When you sell a property with equity release, the sale proceeds will first be used to repay the outstanding loan. This includes the original lump sum borrowed and any interest that has rolled up over time. With lifetime mortgages, the interest is usually compound, so the longer the plan has been in place, the higher the repayment amount.

Any money left over after repaying the provider is yours to use as you wish. You can put it towards your new home, boost your savings or spend it however you choose.

What should I do before deciding to sell?

Before selling your home with equity release, it is essential to speak with your provider to understand their process and confirm any financial implications. You should also get advice from an independent financial adviser who specialises in equity release, as they can help you calculate your likely repayment figure and assess whether moving or selling is in your best interest.

You may need a solicitor with experience in equity release sales to handle the legal side of the transaction, including dealing with the lender and ensuring that all funds are repaid correctly.

Conclusion

You can sell your house even if you have taken out an equity release plan, but you will need to repay the provider from the sale proceeds. There may be additional charges or conditions depending on how long the plan has been in place and what type of property you plan to move to. With the right advice and planning, it is entirely possible to sell your home and manage the equity release responsibly. Just make sure you understand your obligations before going ahead.