Downsizing After Equity Release in Jan 2022

Released Equity & Now Want to Downsize? Is This Possible?

Contributors: Nicola Date, Katherine Read. Reviewed by Francis Hui

Life Is Unpredictable & You Never Know How Your Situation Could Shift. The Question Is, Will You Be Able to Downsize at No Cost, Even Though You've Released Equity From Your Home? We've Got the Inside Scoop!

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Why You Should Be Confident With Downsizing Protection

Without this crucial information, you could end up paying 1000’s of hard-earned pounds to downsize!

Sounds absurd? Well, it’s not.

When claiming your share of the over £2bn in equity that’s already been released in 2021, you MUST read the fine print. Otherwise, when you want to downsize at a later stage, you could be trapped in your big old house.

If you’ve already unlocked equity and now have decided to take a step in a new direction, we’ve got a secret to share.

We’ll help you discover:

  • If it’s possible to downsize with an equity release plan.
  • If there are costs involved in downsizing with equity release.
  • The secret to avoiding these costs.

Could Downsizing While Having an Equity Release Plan Cost Your Life Savings? Find out now!

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3 Main Reasons to Downsize

While there are countless reasons why you may consider downsizing, here are 3 of the most popular ones:

  • As a means to reduce time and money on property maintenance and upkeep.
  • To take advantage of the empty nest. There’s simply no need for a giant home.
  • As a way to drastically reducing bills. 43% of retirees downsize for this reason.

Downsizing is often practical and not financial. But, whatever your reason, speak to your financial adviser, who can guide you through the process.

Downsizing Repayment Charge Exemption

The biggest fear when it comes to equity release is being tied into an agreement that you can’t escape. This is more relevant than ever. Due to financial struggles caused by Covid-191, 1.8m retirees in the UK are looking to move to smaller homes. 25% of these within the next 12 months, 54% within the next 2 years, and 21% at a later stage in life.

Great news!

You won’t be restricted if you have the right lifetime mortgage. You could maintain your plan while moving into a smaller home, OR pay it off without incurring any penalties.

This Is Thanks to the Equity Release Council

Over the years, lifetime mortgages have evolved and have become more flexible and cost-effective.

Upon the formation of the Equity Release Council2, what was once the wild west of financial products, is now a fully regulated market.

The implementation of the council has brought about products like downsizing protection3. If your new home meets the proper criteria, you could transfer your current plan. In addition, there are options to downsize and pay back your equity release plan in full.

You can do so for 2 reasons:

  • If you no longer want to carry your equity release to your new home.
  • If your new home does not meet the criteria of your plan provider.

The great news is that 45% of equity-release products now come with downsizing protection. In general, it’ll be available to you after the first 5 years of taking out your loan.

Discover: The Best Equity Release Companies

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The Benefits Of Downsizing Protection

Here are the 3 benefits of this fantastic tool:

  • You can pay off your equity release with the balance of your home’s sale value without incurring extra costs that could be crippling.
  • You have the option to move due to unforeseen circumstances.
  • You can use the money saved for upkeep on your new home or new furniture or appliances.

How Do I Know if My Old Plan Has Downsizing Protection?

Is Downsizing Worth the Fuss?

How Will I Know if My Potential Plan Has Downsizing Protection?

In Conclusion

Whether you’re releasing equity for the 1st time or have an existing plan, downsizing protection could be a handy tool.

However, before making any drastic life changes, you must weigh up the pros and cons. A plan with downsizing protection might come with higher interest rates, so it’s vital that you have the knowledge to guide an informed decision.

We suggest you speak to your independent financial adviser to see what your current or potential plan offers.

Editorial Note: This content has been independently collected by the SovereignBoss advisor team and is offered on a non-advised basis. Sovereignboss may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations. Learn more about our editorial guidelines.

rachel w

Rachel Wait
Personal Finance Journalist

Rachel is an experienced finance journalist and editor with a particular interest in personal finance and consumer affairs. She has vast experience writing about money issues, property, insurance, and consumer affairs, and you’ll find her articles regularly featured in top media and newspaper publications.
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Written by
John Lawson
Founder SovereignBoss

John is passionate about education and has made it his life-long mission to assist UK citizens on their future financial options, with a specialist interest in equity release, and SovereignBoss is the natural extension of this passion.

Reviewed by
Francis Hui
Senior Risk Manager

Having held various high-level roles across the industry, Francis is truly an expert in aiding UK citizens in their financial decisions and risk analysis. His unique insight and statistical knowledge make him the perfect person to help you take your financial future to the next level.
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Katherine Read
Consumer Affairs Writer

Since joining the editorial team at SovereignBoss, Katherine has become focused on bringing transparency to finances and opportunities for those approaching retirement age. She writes on the topics of equity release, home reversion, and mortgages.

Nicola Date
Writer & Journalist

Nicola is a financial writer for SovereignBoss and is passionate about the opportunities that equity release can open up for homeowners. Her extensive business experience and deep understanding of the industry means that she’s always up-to-date with the latest developments.

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