If you’re thinking about taking out equity release, or you already have an equity release plan, you may be wondering whether you can move house or whether you would have to remain in your current home throughout retirement. 

All lifetime mortgage plans that are approved by the Equity Release Council enable borrowers to move home if they wish to. Although, there are several factors to consider before you begin house hunting!

(Note: If you have a home reversion plan you do not own 100% of your property and so you might not have enough equity to purchase a new home.)

What to consider when moving home with equity release

Before you begin browsing rightmove and packing up boxes, there are several things you need to consider. Firstly, you must seek specialist financial advice to ensure that it is a suitable decision based on your circumstances. An equity release adviser can assess the cost implications of transferring your equity release loan, weigh up the pros and cons and present you with a detailed report and recommendation.

Here are some of the many factors that an equity release adviser can explain in more detail:

  • The new property you wish to purchase must meet the lender’s criteria. For example, lenders will typically not lend on properties within retirement complexes or against properties constructed using certain materials.
  • If the purchase price of the new property is considerably less than the value of your current home, you may need to repay some of the equity release loan to ensure that there is sufficient equity in the property. 
  • You will need to pay a non-refundable valuation fee upfront.
  • There will be other associated moving costs to consider.

Once you have spoken to an equity release adviser and they have carefully assessed your circumstances they might recommend an alternative solution to transferring your equity release plan. Instead of porting your lifetime mortgage to a new property, an adviser might recommend that you repay the outstanding loan and take out a new equity release plan on your new property.

Transferring or porting your equity release loan…

If your adviser recommends that you port your existing equity release plan over to your new property, this will likely be a quicker and smoother process.

The interest rate on your current plan will remain the same and so you’ll have peace of mind knowing that your rate won’t increase when moving.

When porting an existing mortgage you are not required to seek legal advice, although you can if you wish to, and so this could save you money when moving.

Paying off your equity release plan and taking out a new one…

One of the most important considerations when paying off an existing equity release plan is that you may be liable to pay an Early Repayment Charge which could be very expensive.

When taking out a new plan you will have access to new product options with different interest rates which could potentially be lower than the interest rate on your existing plan, saving you money. 

You must seek legal advice when taking out a new plan and so you’ll need to consider these costs.

Next steps

If you would like to learn more about porting your lifetime mortgage to a new property, give us a call on 0203 435 9561 or email Barry Leigh, one of our Equity Release Advisers, via barry@prpltd.co.uk.