Can you move house if you have equity release – and take your plan with you?
Equity release is typically intended to be a lifetime commitment. However, lenders understand that many people in retirement decide to downsize or move closer to family. So as long as your new home meets your chosen lender’s criteria, you’ll have the freedom to sell and move house.
In fact, all Equity Release Council approved plans guarantee you have the right to move house and take your lifetime mortgage with you. This is known as ‘porting’ your plan.
What is the criteria for porting a plan?
While the lending criteria differs between providers, all equity release plans which comply with Equity Release Council standards allow you to move house. As stated on their website: ‘You have the right to move to another property subject to the new property being acceptable to your product provider’.
This means that your new property must meet the same criteria as if you were taking out a new plan. The reason for this is that equity release providers need to make sure they can sell your home when you pass away or move into long-term care. As a result, they may be unwilling to accept properties that could prove difficult to sell.
When you are moving home, some property types that may be deemed unacceptable can include:
- A property of non-standard construction.
- Those located a short distance from commercial premises.
- Ex-council homes.
- Properties forming part of a retirement complex.
- Studio apartments, basements flats or static or mobile homes.
But please don’t rule out taking your equity release plan with you if you want to move to one of these property types. Each provider has their own criteria, and some may accept properties that others rule out. If your new property is unacceptable, you would need to repay your equity release plan in order to move.
Does the value of my new home matter?
In order for your plan to port smoothly to your new home, it does make the process simpler if the properties are of similar value. This does not mean that you cannot move to a smaller or less expensive home, however.
If you wish to move to a property with a lower value than your current home, your lender may require a partial repayment of your loan. This is to keep your loan within its lending limits.
Will I incur penalties if I move house?
As long as you select an Equity Release Council approved plan, you will be free to move house and take your plan with you penalty-free, subject to your new home meeting your lender’s criteria. At Equity Release Wise, our selected advisers will only recommend these types of plans to ensure customers receive the highest level of protection.
If your new property doesn’t meet your lender’s criteria, you may have to pay off your loan in full in order to move. In this case, early repayment charges (ERC’s) may apply.
If you are concerned about incurring ERCs, some lenders offer protections or guarantees called ‘downsizing protection’. This allows you to pay back the loan and any accrued interest early when you move home, without penalty. For example, some lenders will waive early repayment charges if you move within three years of your spouse passing away or moving into long-term care.
At Equity Release Wise, our selected advisers are familiar with each provider’s lending criteria and charges. They can answer your questions about moving home with equity release and help you find the most suitable plan. Get started today by calling 0800 096 2215 or request a call back for a time that suits you..