Specialist equity release solicitor, Rhyannon Andrews, looks whether you can sell your house if you have an existing equity release product.
If you have already taken out equity release or if you are considering whether equity release is right for you, one of the questions you may be worrying about is whether you are able to move home.
The short answer is yes. Equity release lifetime mortgages approved by the Equity Release Council allow an individual to move home whenever they would like. That said, it is always important to check the precise terms of your mortgage offer to be sure of your lender’s specific requirements. It is likely that the following conditions will apply when transferring an equity release mortgage from one property to another:
In the first instance it is necessary to obtain financial advice from a mortgage broker who specialises in equity release mortgages. The broker will be able to offer advice on whether an existing mortgage can be ported; or alternatively, whether a mortgage can be repaid with a new loan being taken out on the new property.
Once the financial aspects have been agreed it is necessary to involve solicitors. The legal process of transferring an equity release mortgage to a new property is more complex than a sale and purchase involving a standard mortgage. It is therefore essential to instruct a solicitor who has the expertise to deal with equity release mortgages alongside the conveyancing process. Holmes & Hills have several specialist equity release conveyancers with the necessary experience to assist.
The conveyancing aspects of the matter will progress much the same as any other sale and purchase although there will be the need of including the lender’s solicitor in the process. They will want to be kept in the loop, receiving copies of all legal documentation and information relating to the new property. The lender’s solicitor may have some questions on this documentation and if this is the case, they will ask us to raise those enquiries with the seller and their solicitor.
In terms of the legal process relating to the equity release mortgage, this will be much the same as when the mortgage was initially obtained. A face-to-face meeting will be required to discuss the terms of the mortgage. Where the mortgage is being ported it is likely that the mortgage terms will remain the same in which case this meeting serves as a refresh. However, if a new mortgage has been applied for, the meeting will provide the necessary legal advice on all terms of the new mortgage. This advice will also be followed up in writing so that you can refer to it in the future.
Once completion has taken place, we will ensure the property you have sold is released from the mortgage, having established the lender’s requirements beforehand. We will also deal with registration of the equity release mortgage against the new property and deal with any post-completion processes the lender has.
It is important to bear in mind that if the new property is worth less than the old property, some of the loan may need to be repaid to the lender, along with interest, upon completion. The partial repayment may also trigger payment, or part payment, of an early repayment charge. The sum to be repaid, if any, will be decided by the lender when the new mortgage is applied for and you will need to have a plan in place for this payment, for example, using equity in your home or cash reserves.
If you decide to move house but to do not want to port your equity release mortgage there may be the option of repaying it in full. By doing so however, you will likely incur an early repayment charge and it is important that you check with your lender whether such a charge will be incurred. That said, some lenders now offer a ‘downsizing protection’ clause in which the lender waives the early repayment fee. To see if you have the benefit of this feature, please check the financial and/or legal advice you received at the time you obtained your current equity release mortgage. You will want to check the exact details before deciding whether to repay.
Our specialist equity release lawyers can assist with any questions you may have regarding the equity release conveyancing process, and have extensive experience in these types of transactions.