How to move house with an Equity Release plan
You are not prevented from moving house with an Equity Release Plan, but it may be something that will require some thought before you do.
An Equity Release plan is no different from a standard mortgage in that it is a First Charge loan. This means that when the property is sold, the lender, in this case the Equity Release provider, must be repaid first. Any remaining balance is then yours.
A new plan will then be put into place on the new property if that is what you want to do. However, the new property will have to meet whatever criteria the Equity Release provider has in its current terms and conditions.
If you are selling your house and intend to repay the Equity Release plan from the proceeds of the sale, and you do not wish to have a new Equity Release Plan secured on your new property, then the situation is pretty straightforward.
The main thing, and possibly the only thing, to look at carefully in this situation is to make sure you are fully aware of any penalties or early repayment costs that you may be charged. Your provider will be able to provide these to you quite quickly and easily.
Should you wish to secure an Equity Release Plan on your new property, then there are a number of things you need to take into account before you put your current house on the market.
Six things to consider if you want to sell your house and transfer your Equity Release Plan:
- When you first took your Equity Release Plan, your provider would have given you details of what they would and would not do if you wished to move house, including penalties, special conditions, and what types of property they will and will not accept.
Although this is a good starting point, be aware that providers vary their terms and conditions according to market conditions, so the sooner you speak to them, or your adviser, about your plans the better.
If you no longer have the paperwork just give them a call and they will be happy to send you copies. - Find out as much as you can about the property you wish to buy and what is and isn’t acceptable to your lender.
An Equity Release provider will need to know the value of the new property in order to ensure you are not exceeding the maximum percentage they will loan. They will also need to know the condition of the property, its location, and whether it is freehold or leasehold.
Remember that if your provider will not accept your new property it does not mean that all providers will reject the property as security. - All Equity Release providers insist that the property you are using as security is adequately insured.
Find out the insurance costs and any special insurance conditions that may apply to the new property as early in the process as possible. Not only will it save a lot of time if a problem crops up, it will also flag any problems with the property and help you to decide if you really want it or not. - Make sure you are fully aware of the costs involved for your move. These will include legal costs, admin fees and, possibly, survey costs.
- As with any mortgage, moving home provides an ideal opportunity to look around at different lenders to see if you are on the best deal. Since taking your original plan, many things could have changed. Interest rates could be more competitive and providers may be offering different features and benefits that were not available to you initially.
- The best thing you can do to ensure a smooth transition from one property to another is to talk to an experienced and qualified professional. You do not have to use your original advisor and any good one will be pleased to offer you initial independent advice for free so you can weigh up your options objectively before you make any expensive financial commitments.
