It’s not uncommon for people to sell their home, or to move house after taking out an equity release plan. We explain the ins-and-outs below.
When a homeowner with an existing equity release plan sells their home, they are obligated to settle their debt with the equity release provider with a lifetime mortgage. This reimbursement is typically funded directly from the proceeds of the sale, which includes both the initial loan amount, and any interest that has accrued over time, plus there may be an early repayment charge. However with a home reversion plan, the remaining proportion percentage monetary value of the property not sold to the equity release provider will be passed to the owner on sale, or be able to move the plan to another property.
The maximum borrowing limit achievable through equity release will depend on your age and is capped at around 60% of your home’s appraised value for someone in or around their eighties. . However, as mentioned the precise amount is contingent on variables such as your age, your health and lifestyle, and other factors that a qualified adviser will be able to inform you. In the same way you can gain more money from a pension annuity, if you have certain health conditions, or certain lifestyle choices such as smoking, you will be able to release more money from your property.
In most situations, you’ll be able to transfer the existing loan from your previous property to the new one, and the conditions of the equity release scheme may stay unchanged, however this is subject to the new property being accepted by the lender.
It is possible to sell your home when you have an equity release plan in place. Nevertheless, it is important to be aware that with an equity release mortgage it will need to be repaid from the proceeds of the sale, and settling the outstanding equity release loan will involve repaying all the loan plus any accrued interest and any early repayment charge that may be applicable. With a home reversion plan, the property can be sold and the percentage of the property that you own will be paid out to you from your legal representative on sale.
If you have a lifetime mortgage, an equity release plan will enable you to retain ownership of your property. With a lifetime mortgage equity release plan, you will maintain ownership rights to your home, apartment, or property, and you reside there with guaranteed rights of residency until your passing, or until you enter long-term care. With a home reversion plan, you own the proportion of the property not sold to the equity release company in exchange for the cash amount received and again you have guaranteed rights of residency.
For further information or if you have any questions, please feel free to get in touch on 0808 169 8316. Alternatively, you can request a callback, send us an email, or message us through the live chat on our website.
