Moving house with equity release or home reversion

If you have a lifetime mortgage and want to move, the usual answer is that you can take the plan with you. Equity Release Council standards say customers must be allowed the opportunity to move to a suitable alternative property and transfer their lifetime mortgage, subject to the lending criteria at the time of the move¹. The provider has to agree the new home is suitable security for the loan². If it does not, or if you would rather clear the debt, you can repay the plan instead, though there may be charges for doing so³.

Home reversion works differently. With a home reversion plan you have already sold the provider a share of your home, typically from 25% to 100% of its value, and you keep the right to live there for life². When the property is sold, on death or a move into long-term care, the provider receives their share of the proceeds⁵. That share is tied to the property you are leaving, so a move means the plan is settled from the sale rather than carried across.

Either way, moving is a moment when costs, benefit entitlement and the size of your estate all come into play. This page sets out what each type of plan allows, what triggers a charge, when a new home may not qualify, and who to speak to before you sell.

Moving home with a lifetime mortgage: transfer it or repay it

A lifetime mortgage is designed to let you stay in your home. You usually do not have to make repayments while you remain there, and the loan is paid back after you have moved out or died³. The debt is repaid once you die or move into long-term care and the property is sold, and it grows over time, eroding the property's value⁵. Your plan is built around the intention that you stay living in your home until you either die or become unable to continue living there⁸.

Moving does not have to end the plan. You can repay your product or, depending on the property you already own, transfer the product to your new home, though there may be charges for doing so². The transfer route is the one the Council's standards protect: the opportunity to move to a suitable alternative property and transfer the lifetime mortgage, subject to lending criteria at the time of the move¹.

The phrase "at the time of the move" matters. The provider assesses the new property against its criteria then, not against the criteria that applied when you first borrowed. If the new home does not meet them, transferring is not available and the plan has to be repaid from the sale. That is why it is worth checking the position with the provider before you commit to a purchase, rather than after.

If you move into long-term care and leave your home, an equity release mortgage would not be permissible in that situation⁴. Where you move into long-term care and do not have a spouse or partner still entitled to live in the property, it will be sold and the amount you borrowed, plus interest, will be paid back to your equity release provider⁸.

Home reversion: the provider owns a share of the home you are leaving

Home reversion is a different arrangement. You sell a percentage of your home's value to a scheme provider and are entitled to remain in your home for life³. Under a home reversion plan you can typically sell from 25% to 100% of your home⁴, and with this type of equity release you can sell up to 100% of your home to your provider⁹.

The legal shape of it is set out in the regulator's glossary: the arrangement is one under which the reversion provider buys all or part of a qualifying interest in land from an individual or trustees, the reversion occupier¹⁰. In plain terms, you convey the deeds to the scheme provider, totally or up to an agreed percentage, and the provider owns that part of the property⁶.

Because the provider owns a share of the bricks, not a debt secured on them, there is nothing to port to a new address. On sale of the property, on death or a move into long-term care, the provider receives their share of the proceeds⁵. If you want to move, the practical sequence is that the existing home is sold, the provider takes its share, and you buy the next home with what remains, subject to whatever terms your plan sets.

That makes the arithmetic of a move more exposed than with a lifetime mortgage. If the provider owns a large share, the amount left from the sale may not stretch to the home you want. It also means the value of the property you are leaving, not just your own circumstances, drives what you can afford next.

Early repayment charges and other costs of moving

If you repay rather than transfer, the cost depends on the plan. You might have to pay an early repayment charge if you end an equity release agreement early, and this can often be a significant amount³. Some providers charge for paying back the plan in full², and some equity release plans have penalties for early repayment, which can be costly if you decide to pay off the loan soon¹¹. Early repayment charges should be checked when choosing a plan¹².

There is one clear exception. No early repayment charges are payable if the borrower moves into long-term care and the property is sold, where no spouse or partner is still entitled to live in the property⁸.

Beyond the equity release plan itself, moving house inevitably comes with costs, which might include stamp duty, legal costs, mortgage broker fees, property valuation fees, or charges for paying back and exiting your current mortgage early¹³. Where a mortgage is ported, the costs include any early repayment charge, lending fee or mortgage release fee¹⁴. Early repayment charges on mortgages generally can add up to tens of thousands of pounds, so it is worth thinking about when you will next move home¹⁵.

When the new home may not qualify: age, value and condition

The provider's agreement is the gate. You are allowed to move to another property as long as your equity release firm agrees that the new property is suitable as security for your equity release loan². How much you can borrow is based on your age and how much your home is worth, and it is not related to what you can afford to repay². That means the value of the property you are buying feeds directly into whether the numbers work.

Some situations fall outside what providers will accept. If the property owner or owners are moving into long-term care and leaving their home, an equity release mortgage would not be permissible⁴. Rules on moving in with a relative vary: some providers will only allow you to move in with a relative if your medical needs require this, while others may not be so specific⁸.

There is a wider lesson from ordinary mortgage porting that applies here too. If your circumstances have changed, you might not qualify¹⁵. A lender assessing a move may also set its own conditions: one building society, for example, asks borrowers moving home in negative equity to have a need to move home, be in permanent employment, be able to afford the new borrowing, agree to a new mortgage on a capital repayment basis, and not be moving to a new build, shared ownership or shared equity property¹⁶.

If the new home does not qualify, the fallback is to repay the plan from the sale and, if you still want to buy, arrange whatever borrowing or purchase your circumstances allow. That is a different transaction with its own affordability checks.

Downsizing, benefits and your estate after a move

Moving to a cheaper home and clearing part or all of the plan is usually possible. It might not be right if your house is already for sale or if you want to move soon². Selling your property and moving to a cheaper one is one of the recognised alternatives to equity release, alongside using existing savings and investments, making sure you are claiming all available benefits, and home improvement grants¹⁷.

Benefits need checking before you move, not after. Taking out an equity release mortgage could potentially affect benefit entitlement, so applicants should check with the relevant benefits agency before commencing the application process⁴. Released money can be treated as savings for means-tested benefits such as Universal Credit and Pension Credit, though funds paid directly to a mortgage lender are not usually treated as savings¹⁸. The amount of equity in your property can reduce your benefits once you move out¹⁹. Pension Credit itself brings smaller practical help, such as a discount on the Royal Mail redirection service if you are moving house²⁰.

Your estate is affected too. Equity release reduces the value of your estate and the amount that will go to the people named as beneficiaries in your will²¹. It reduces the value of your estate and how much you leave your loved ones when you die²². The Council's own consumer guide puts it plainly: equity release reduces your estate's value and could affect means-tested benefits or tax²³. Other risks to weigh include future property prices being higher or lower than today, the effect on your tax position, the impact on benefits you already get or could apply for, implications of securing other debts against your home, and the fact that consolidating debts over a longer period may mean you pay more overall².

Getting advice before you move: advisers and solicitors

Before deciding, get advice from an independent financial adviser who specialises in equity release⁷. A suitably qualified and authorised adviser will need to take detailed information about your situation and requirements, then consider all options, including mainstream mortgages, retirement interest-only mortgages and other options, before making a recommendation⁵. Council member advisers work to a standard that advice will consider your personal circumstances, including an assessment of your income and expenses, and will explore alternatives to equity release¹.

On the legal side, appoint a solicitor who has experience in equity release, as this will help the process²⁴. The Council also provides help and information on equity release directly²⁵.

If something goes wrong with the advice or the plan, the Financial Ombudsman Service considers complaints about equity release³. Free, impartial guidance is available from MoneyHelper and from debt advice charities, and the Council's own consumer guide and standards set out what member firms must do²³.

Where a shared equity scheme is involved rather than equity release, the process has its own steps. In Scotland, before you increase your stake in your property you are advised to take independent financial and legal advice, and to contact the administering agent when you wish to increase your equity stake²⁶. If you want to remortgage a home bought through the Open Market Shared Equity scheme, you have to contact the registered social landlord or local council who handled the sale²⁷. Before you buy a house in Scotland, the seller will give you a Home Report²⁸.