Selling a House with Equity Release

Equity release has become an increasingly common way for homeowners aged 55 and over to access the wealth tied up in their property without having to sell. But circumstances change. You may want to downsize, move closer to family, fund care needs, or simply move on to a different property. When that happens, the existing equity release plan adds a layer of complexity to the sale that needs to be understood and managed properly.

This guide explains how selling works when you have a lifetime mortgage or home reversion plan in place, what charges you may face, how much of the sale proceeds you can expect to keep, and what options exist for transferring the plan to a new property. If you are considering selling in retirement more broadly, see our guide on selling your house after retirement.

Types of equity release: lifetime mortgages and home reversion plans

Before looking at the selling process, it helps to understand the two main types of equity release, as the implications for selling differ between them.

Lifetime mortgages

A lifetime mortgage is a loan secured against your home. You retain full ownership of the property. Interest accrues on the loan and, in most cases, is not repaid monthly but instead “rolls up” and compounds over time. The total debt — the original loan plus all accumulated interest — is repaid when you sell, die, or move into permanent long-term care. Some plans allow voluntary interest payments or ad hoc capital repayments to slow the growth of the debt, but this is not a requirement.

Lifetime mortgages account for the vast majority of the UK equity release market. According to the Equity Release Council, lifetime mortgages represented over 99% of new equity release plans agreed in recent years.

Home reversion plans

A home reversion plan involves selling all or part of your property to a provider in exchange for a tax-free lump sum, regular payments, or both. You no longer own the share you have sold, but you retain the right to live in the property rent-free for life. When the property is eventually sold, the provider receives its percentage share of the proceeds. If you sold 50% of the property to the reversion provider, they receive 50% of the eventual sale price, regardless of how much the property has increased in value.

Home reversion plans are now relatively rare in the UK. The amount paid for the share is always substantially below the open market value — typically 20% to 60% of the market value of the share — because the provider cannot realise its investment until an uncertain future date.

The selling process with equity release

Selling a property with an equity release plan follows the same broad conveyancing process as any other property sale, with additional steps to deal with the equity release lender's charge on the property.

1. Contact your equity release provider. Before putting the property on the market, contact the provider to request a redemption statement. This will show the total amount owed including rolled-up interest, any early repayment charges, and the administrative fees for discharging the charge. Ask about portability and downsizing protection at the same time.
2. Instruct a solicitor with equity release experience. Most equity release lenders require you to use a solicitor on their approved panel. Your solicitor will manage the redemption process alongside the standard conveyancing. For more on what this involves, see our guide on what your solicitor actually does.
3. Market and sell the property. The sale itself proceeds normally. Estate agents, viewings, offers, and negotiations work exactly as they would for any property.
4. Exchange and complete. At completion, the solicitor uses the sale proceeds to redeem the equity release plan in full. The lender's legal charge is removed from the title at HM Land Registry. The remaining balance, after deduction of the redemption amount, any ERCs, and the usual selling costs, is paid to you.

Early repayment charges: the key cost to understand

Early repayment charges are the single biggest variable cost when selling with equity release. They apply because you are repaying the plan before the standard triggering events (death or entry into permanent care), and the lender loses the future interest income it expected to receive.

How ERCs are calculated

The method for calculating ERCs varies depending on the plan and when it was taken out:

On older plans with fixed percentage ERCs, the cost can be significant. A 10% ERC on a £100,000 original loan is £10,000 — money deducted from your sale proceeds on top of the accumulated interest already owed. For a full picture of all the costs involved in selling, see our guide to conveyancing costs.

The no negative equity guarantee

One of the most important consumer protections in equity release is the no negative equity guarantee (NNEG). All plans approved by the Equity Release Council must include this guarantee, and it has been a core requirement of Council membership since the organisation was founded.

The NNEG means that when the property is sold, neither you nor your estate will ever owe more than the sale price achieved on the open market. If the rolled-up interest has caused the total debt to exceed the property's value — a scenario known as negative equity — the lender absorbs the shortfall. It cannot pursue you, your family, or your estate for the difference.

For the guarantee to apply, the property must be sold at the best price reasonably obtainable. This is normally evidenced by an independent RICS valuation and an open market sale through an estate agent. A sale to a family member at below market value, or a quick sale to an investor at a discount, could potentially compromise the guarantee.

Porting equity release to a new property

If you are selling because you want to move rather than because you need to repay the plan, porting — transferring the equity release to a new property — may be an option. Many modern lifetime mortgage plans include a portability clause, but it is not automatic and is always subject to the lender's approval.

What the lender assesses when you port

• Property value: The new property must be worth enough to maintain an acceptable loan-to-value ratio for the lender. If you are downsizing to a significantly cheaper property, you may need to make a partial repayment.
• Property type and construction: Standard construction freehold houses are easiest to port to. Flats (especially above commercial premises), non-standard construction, listed buildings, and retirement properties may not be accepted.
• Location: The property must be in England, Wales, or Scotland (most providers do not lend in Northern Ireland for equity release).
• Condition: The property must be in reasonable repair and habitable. A full RICS valuation is always required.

If the lender approves the new property, the existing charge is released from the old property at completion and a new charge is registered against the new property. The interest rate and other plan terms typically remain unchanged.

Downsizing protection

Downsizing is one of the most common reasons people with equity release want to sell. Recognising this, many equity release providers now offer a downsizing protection feature on their plans. If you are considering downsizing more broadly, see our guide on selling to downsize.

Downsizing protection allows you to repay the equity release plan in full without incurring early repayment charges, provided:

• You have held the plan for a minimum qualifying period, typically three to five years (varies by provider)
• You are moving to a property that does not meet the lender's criteria for porting (for example, a retirement flat, sheltered housing, or a property below the minimum value for porting)
• The sale is a genuine open market transaction, not a transfer to a family member

This feature is not universal. If downsizing protection was not included in your original plan, it cannot usually be added retrospectively. Check your plan documentation or contact your provider directly to confirm whether it applies to your plan.

How equity release affects your sale proceeds

The central financial question for most people selling with equity release is: how much will I actually receive? The answer depends on several variables.

Example: the effect of compounding interest over time

The table below illustrates how a £75,000 lifetime mortgage at 5.5% compound interest grows over time, and how this affects the net equity available from a property originally worth £300,000 (assuming 2% annual property growth):

This example shows how compounding interest steadily erodes the net equity over time. After 25 years, the debt has grown to nearly four times the original loan. Even with modest property price growth, the homeowner's available equity is significantly reduced. This is before any early repayment charges or selling costs are deducted.

Equity Release Council standards

The Equity Release Council is the industry body that sets standards for equity release products and providers in the UK. All Council members must adhere to a set of principles designed to protect consumers:

• No negative equity guarantee: The borrower or their estate will never owe more than the property's sale price.
• Right to remain: You have the right to live in the property for life, provided it remains your main residence and you comply with the plan terms (such as maintaining the property and keeping it insured).
• Independent legal advice: Every customer must receive independent legal advice from a solicitor before completing an equity release plan.
• Fixed or capped interest rates: Lifetime mortgages must have a fixed interest rate, or an interest rate cap, for the duration of the plan. Variable uncapped rates are not permitted.
• Right to move: You have the right to move to another property and port the plan, subject to the new property meeting the lender's criteria.

The Council's standards are not statutory requirements, but the vast majority of equity release business in the UK is conducted through Council member firms. Equity release itself is regulated by the Financial Conduct Authority (FCA), which supervises firms and advisers involved in selling and advising on these products.

Solicitor requirements for selling with equity release

The conveyancing for a sale involving equity release is more involved than a standard sale. Your solicitor must:

• Obtain a redemption statement from the equity release provider and verify the figures
• Coordinate the timing of redemption so that the lender's charge is released at or immediately after completion
• Ensure the sale proceeds are applied in the correct priority: the equity release lender is repaid first, then any other charges, then selling costs, and finally the net proceeds are released to you
• If porting, manage the simultaneous release of the old charge and registration of a new charge on the replacement property
• Confirm whether downsizing protection applies and ensure it is properly invoked with the provider

Most equity release providers maintain a panel of approved solicitors who are experienced in handling these transactions. Using a solicitor outside the provider's panel may not be accepted. If you need guidance on costs, see our guide to conveyancing costs.

Timeline differences when selling with equity release

While the core conveyancing timeline remains twelve to twenty weeks, selling with equity release can add time at certain stages:

The most effective way to minimise delays is to contact your equity release provider and instruct a solicitor as early as possible — ideally before putting the property on the market. Having the redemption statement in hand before you accept an offer means there are fewer unknowns once the conveyancing process begins.

Selling with equity release to fund care

A significant number of properties with equity release are sold because the homeowner needs to move into residential care. In this situation, the equity release plan is repaid from the sale proceeds in the usual way. If the plan includes a no negative equity guarantee (as all Equity Release Council plans do), the estate is protected even if the debt exceeds the property value.

If you or a family member are in this situation, our guide on selling to pay for care fees covers the local authority means test, deferred payment agreements, and capital thresholds in detail. Where equity release is involved, the net proceeds after redemption are the figure assessed against the care funding capital threshold of £23,250 in England.

What to check before you sell

Before committing to selling a property with equity release, work through the following checklist:

1. Request a redemption statement from your equity release provider showing the total debt, any early repayment charges, and administrative fees.
2. Check whether your plan is portable and, if so, what criteria the new property must meet.
3. Check for downsizing protection and whether you meet the qualifying period and other conditions.
4. Get the property valued by two or three estate agents to understand the likely sale price and therefore the net equity available to you.
5. Instruct a solicitor who is on the equity release provider's approved panel and has experience with equity release redemptions.
6. Take independent financial advice from a qualified equity release adviser, particularly if you are considering porting or if the sale is connected to care funding decisions.
7. Inform your beneficiaries. If family members are expecting an inheritance, the equity release debt may have grown significantly since the plan was taken out. Transparency avoids difficult conversations later.

Sources

• Equity Release Council — Standards and consumer protections — equityreleasecouncil.com
• Financial Conduct Authority — Equity release and lifetime mortgages regulation — fca.org.uk
• MoneyHelper — Equity release explained — moneyhelper.org.uk
• GOV.UK — Capital Gains Tax on property — gov.uk
• Age UK — Equity release factsheet — ageuk.org.uk
• The Law Society — Guidance on acting for clients in equity release transactions — lawsociety.org.uk
• Society of Later Life Advisers (SOLLA) — Find a specialist equity release adviser — societyoflaterlifeadvisers.co.uk

Frequently asked questions