While many people happily remain in their current home after taking Equity release, life circumstances can change.
If you’re considering a move, whether it’s downsizing, relocating for family, or needing a Property with different features, you might be wondering if you can take your equity release plan with you. The good news is, the answer is often yes.
Please Note: The content on this page is designed to be a helpful starting point for understanding equity release. It explores the concept, different plan types, and the general process involved. However, equity release is a complex financial decision with significant implications for your long-term financial security. To determine if equity release is the right option for you, it’s essential to consult with a qualified financial adviser who specialises in equity release products.
Your moving home options
If you need to move home with an equity release mortgage in place then you have two options to consider.
Take the lifetime Mortgage with you
This is known as ‘porting’ a mortgage.
You will need to inform your current lender of your intentions and seek their approval. Transferring a mortgage in this way is typically much cheaper as you will avoid any early repayment charges and upfront product fees.
Apply for a new lifetime mortgage
You don’t have to stick with the same lender, although many people prefer to do this.
The alternative is to apply for a new lifetime mortgage for your new home.
How to take a lifetime mortgage to your new home
The very first thing to do is check whether this is even possible.
If you’ve had your lifetime mortgage for sometime then it may not have the facility to be transferred (ported) to another property.
Plans approved by the Equity Release Council give you the right to move to a “suitable alternative property”.
Product standards
Our product standards are set out below. Our members are only allowed to tell you that a product meets these product standards if it meets all of them. If you are offered or are considering a product that does not meet all of the standards, the product literature must explain which standards are not met, and give an illustration of the types of risk that this might pose for you.
Our product standards are as follows:
- For lifetime mortgages the rate must be fixed for each release or, if variable, the rate must be capped for the life of the loan.
- You must have the right to remain in your property for life or until you need to move into long-term care, provided the property remains your main residence and you abide by the terms and conditions of your contract.
- You have the right to move to another property subject to the new property being acceptable to your product provider as continuing security for your equity release loan.
- The product must have a “no negative equity guarantee”. This means that when your property is sold, and agents’ and solicitors’ fees have been paid, even if the amount left is not enough to repay the outstanding loan to your provider, neither you nor your estate will be liable to pay any more.
- All customers taking out new plans which meet the Equity Release Council standards must have the right to make penalty free payments, subject to lending criteria.
Go to https://www.equityreleasecouncil.com/about/standards/
The new property
Having the option to move home means that you should be able to stay with the same lender.
But the lender does need to approve your new home first.
They will want to assess the type, value and condition of the property before giving their decision.
Most people will be downsizing, so the value of the new property and the size of your lifetime mortgage are both very important.
Your situation still needs to fit in with the lenders loan to value criteria. This is the loan size as a percentage of the property value.
If you downsize to a much cheaper property then you may not qualify for the same size of mortgage as you have now.
The process
Your equity release adviser can help with the process of moving your mortgage, and you will also need a solicitor who can handle the legal side of buying your new home.
Your lender will want to send a surveyor to view the new property and provide a valuation assessment.
This assessment will look at the style of property, how it is built, the condition and the value.
There will be a valuation fee payable to the lender when you make your mortgage application.
Obviously, the standard selling and buying process still applies, and you may find yourself in a property chain.
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Why would a lender not approve the new property?
All lenders have specific property requirements which their surveyor will be aware of.
If your desired home is of non-standard construction, located in a retirement complex, or has a very short lease, porting might not be possible.
These requirements can vary from lender to lender, but there are some general guidelines that apply in most cases.
Non-standard construction
For a lender non-standard construction is anything that is not; brick or block walls and a pitched tiled roof.
So properties that have a thatched roof, have a steel frame, built from concrete or are ex-local authority will most likely be rejected.
Retirement complexes
Although these are suited to older people, lenders tend not to accept them as they can be difficult to sell on the open market.
Retirement flats can only be bought by people over a certain age and they often come with monthly or yearly fees.
Leasehold
Leasehold properties are generally acceptable, subject to the length of the remaining lease.
As the term of a lease decreases it can affect the value and resale of a property. Short lease properties are very difficult to arrange mortgages for.
Condition
The new property must be well constructed and maintained and suitable to move in to straightaway.
This is not the time to be buying a doer upper!
Value
With equity release you can downsize too much.
There will be a minimum value that the lender needs for your mortgage (as it is now) to be ported.
In this situation you would need to use some of your sale proceeds to reduce the loan to a level agreeable to the lender.
Apply for a new lifetime mortgage
Where it is not possible to transfer the current mortgage, or a new mortgage is more desirable, there are a couple of important considerations:
Early repayment charges
Make sure you fully understand any early repayment charges and exit fees. These are chargeable by the lender you are moving away from.
Usually calculated as a percentage of the amount you owe, they can be considerable sums of money.
Interest rates
By changing lender you will also change your interest rate. It’s possible that the new rate is higher than you are paying now.
Application fees
As you are applying for a new lifetime mortgage, and moving home, expect to pay quite a few different mortgage fees, advice fees and legal charges.
New features
On the plus side, more modern lifetime mortgage plans may come with new features that you could find useful. A popular option is the ability to drawdown more money in the future if you need to. Subject to your age and property value of course.
Equity release advice
Your adviser will be able to explain all of these points and more.
Where to go for advice
Only a suitably qualified adviser is permitted to help you set up or amend an equity release plan.
They will be able to fully explain your options, the costs involved and the advantages and disadvantages.
Once they fully understand your situation they can begin to research your options and select a suitable equity release solution.
Let Respect Mortgages help you.
We can match you to an award winning equity release specialist, with over 25 years experience helping people just like you. Importantly they’re also members of the Equity Release Council.
Please call us on 0330 030 5050 for more details.
We can help you find a whole-of-market equity release specialist.
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Also in this section
Equity Release Hub
Equity Release
Alternatives to equity release
Am I Eligible for Equity Release?
Benefits of Equity Release
Equity Release Guide
How Does Equity Release Work?
Things to Consider Before Taking Equity Release
What is Equity Release?
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