Many people are asking can they sell their house if they have an equity release plan. And the answer to that question is YES!
This article will explain how selling your house after signing an equity release agreement works.
So is it Possible to Sell Your House on an Equity Release Plan?
The short answer is yes:
Provided, however, the lender approves the property first. You can sell your house at any time if it’s in a particular condition and has been mortgaged1 or remortgaged.
It’s important to remember that the lender’s approval is what determines whether or not you can sell.
However, these are the properties on which they are reluctant to lend:
- Retirement homes
- Short term leasehold properties
- Homes that need renovation
- Properties with non-standard construction type
In the same fashion, your original property was assessed to check whether it was suitable for securing an equity release plan; the lender will apply the same type of process to your new property and its suitability.
Moving From One Home to Another
The good news is that most lenders abide and are held by the Equity Release Council rules, which explicitly includes the ruling that customers can move to a ‘suitable alternative property.
A ‘suitable alternative property’ is a home that a homeowner would accept for a new customer under standard equity release suitability criteria.
In any case
Depending on the type of property it is, whether it is of higher or lower value to the previous home, you and the lender will agree on how to handle any repayments or lessening of repayments.
Nowadays, we are finding that there are more flexible equity release plans available.
Learn more about Equity Release Plans
What Does Downsizing Protection Mean For You?
Downsizing protection allows you to downsize your property and give you space to repay your equity release plan. Downsize protection allows your beneficiaries not to be too concerned with the loan that gets paid off when you die.
In addition to that
Once you’ve had the conversation with your equity release provider regarding downsizing and your options, what will happen is that they will arrange for your new house to be assessed by an independent body. They will then evaluate if the new property is acceptable to transfer the lifetime mortgage.
Is Now the Right Time to Sell?
Selling your property and moving to a new one is a big decision, and one is always nervous about if it’s the right time. All homeowners and may have different causes as to why they want to sell.
That is why you must speak to a financial advisor who will look at your particular case.
How Do I Select the Right Equity Release Scheme for My Needs?
If you are choosing between equity release plans, you must consider the following:
- The amount & type of loan
- How much money is available in other assets? (e.g. savings, etc.)
- What will happen if something unexpected happens and repayments cannot be made as agreed?
- Is it possible to sell your home with this plan?
How Do I Know What My Property Is Worth?
There are various ways to find this out, including looking online for recent sales prices in your area. You can also speak to someone from an estate agent who may have sold many properties similar to yours in the past and may be able to tell you a ballpark figure.
How Do I Know if My Property Is Suitable for an Equity Release Scheme?
This is something you need to find out before deciding on anything.
Take the time to speak to a mortgage advisor, and they should tell you whether it’s worth looking into or not (e.g., if there are any issues with your credit score, how much equity you have in your property, etc.).
How Long Does an Equity Release Plan Last?
The length of the agreement depends on what type of scheme you choose.
For example, a lifetime mortgage will usually be for about 25-30 years, and there is no right to sell your property during this time; whereas with a home reversion scheme or vendor finance arrangement, repayment agreements may change over time if circumstances change (e.g., rates rise).
Many factors go into determining if you can sell your house. You should consult with a finance professional to determine what steps need to be taken before selling to maximize the sale price and reduce the time it takes for settlement.
Your home may not even have an equity release available, or there could be restrictions on how much debt is allowed from this option, so it’s important to find out these details before you proceed.