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Can I Move House If I Have an Equity Release Mortgage?

Can I move home with equity release? The short answer is yes, in some cases. It all depends on the plan you have signed up to and the opinion of your provider.

This is why it’s so important to select a reputable lender and a plan that works for you when taking equity release.

If you are not confident that you are going to want to stay in your home for the rest of your life, you may want to take out equity release with a flexible plan that does not involve early repayment penalties.

However, if you’ve already settled on a plan and it’s too late to change it, we can advise you on what to do if you want to move.

Can I Move Home With Equity Release?

If you have followed our advice and chosen an equity release provider that is a member of the Equity Release Council (ERC), you have the ability to move home that you may not have had if you didn’t choose a reliable financial adviser for financial advice or ask for a personalised illustration of your plan.

This is because members of the ERC must permit their clients to move to a ‘suitable alternative property’ rather than obliging them to stay in the property that they released cash from.

This generally means a property that a new customer would be permitted to purchase for an equity release agreement.

The positive of this is that you can continue to benefit from the lifelong scheme, but you can also start over in a new home if this is something that is important to you.

This is particularly reassuring for people who may need to move house to take care of a relative whose health is deteriorating, to be closer to family, or for work.

Equity release may help them to make life-changing decisions that they couldn’t previously afford to do, as they could release an amount of cash that could be put towards something extremely important, which is to say moving for a specific purpose.

On the other hand, this does not mean that you can choose any home to move into. The new property must be approved by the provider, so it must fit their specific requirements, which does mean you are restricted in where you can move.

Paying Off a Lifetime Mortgage After Releasing Equity

If you need to change residence soon but your current house is under an equity release scheme, such as an existing lifetime mortgage or home reversion plan, one option is to repay some of the equity early.

This will allow you to get out of the scheme without the burden of carrying the loan with you. It is important to note that there are usually penalties for this, so you could be paying an extra 25% of the loan on top of what you already owe.

However, this suggestion is only applicable to customers with lifetime mortgages. With a home reversion plan, you have given away a portion of your home, and this means you are no longer the sole rightful owner of the property.

Consequently, you cannot expect to be able to pay off the mortgage on your own and get out of the equity release arrangement. Instead, you are locked into the scheme, which you will have been told by a financial adviser.

Equity Release And Moving Your Loan to Another Property

Another option is to transfer an equity release from your current home to the new property, and many equity release providers will authorise a new property if it fits their criteria.

When transferring your mortgage to a new property, you will still be under the same agreement as before, which includes the amount of money you owe, the amount of cash you are receiving each month (if you have opted for monthly instalments rather than a lump sum of tax-free cash), the interest rate, and the percentage of your house that would go to your relatives when you die vs the percentage that will go to the lender.

The conditions of transference will vary depending on which property is of lower value. If your new property is worth less than your old one, it is most likely going to disadvantage you, so it can be a wise financial decision to find a more costly property.

Here’s why:

If your second house is worth less than your current house, such as if you have made the move to a smaller property, this means the provider would receive less money from the sale. As a result, you may have to pay back some of the loan before you pass away.

Conversely, if the property is more expensive, you could put in a request for a higher loan, which would allow you to move and receive greater financial aid.

The payable amount would increase, so you may need to pay back more, but this wouldn’t be necessary until your property was sold and the existing lender reaped the financial benefits.

Potential Risks Involved With Moving Property With Equity Release Plans

Firstly, the most obvious risk is that it could be very costly if you have to repay the loan early as this may incur an early repayment charge.

If you do not absolutely have to move and you currently live in a suitable property, it’s a much safer decision to stay where you are and remain a permanent resident in your house.

This will benefit you financially, which will eventually benefit any dependents you may want to pass your money to.

Secondly, if you can move by transferring your loan to a new property, you are significantly limited in which type of property you can purchase.

This means that if you are moving for a specific purpose, such as living in a particular area, this may not be possible if it doesn’t fit the lender’s criteria.

Equity Release to Help Secure a Second Home or a Holiday Home

If you haven’t yet taken out an equity release loan and you are interested in doing so, you can use it as a way to purchase a new home.

Simply inform a financial adviser that this is what you would like to do, and they will introduce you to the second/holiday home plan. Please read more about this on our official page.

With this scheme, you are able to secure a property for yourself and your family even if you do not currently have the savings that are required to be able to do this.

You will receive a loan either as a single amount of cash or as monthly transactions, and you will not have to pay the loan back while you are alive (unless you move into long-term care).

The home that you purchase can be anywhere in the world, so you are not restricted by location as you might be with other equity release programs.

This type of plan is a great way to take out a loan with a sense of purpose, remaining confident that it will be spent on something worthwhile.

Can I Move Home With Equity Release: Find Out From an Equity Release Adviser

If you have any other queries about moving property with an equity release plan, do not hesitate to speak to one of our advisers on 0330 058 1579 or send us your details.

We will be in touch to offer a free initial consultation where we will offer expert equity release advice on whether it’s possible to move with your specific type of equity release.

If you are on an existing equity release plan, we can advise you on what to do, taking into account the rules of your equity release provider.

On the other hand, if you are considering equity release but you may want to move in the future, as you never know what’s around the corner, we can advise you on the most flexible plan to go with.

We are receiving a high number of enquiries from people considering equity release in later life on a regular basis, some of which are already addressed in our online help centre, so please have a look at this section of the site.

It details all the features and risks of equity release, including equity release debt, negative equity, downsizing protection, compound interest, how to find a firm regulated by the financial conduct, how to move your debt to your new property, and various frequently asked questions.

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