Can I Sell My House If I Have Equity Release?

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If you are the owner of a leasehold or freehold property and have reached at least 55 years old, you might be able to borrow funds against the money you’ve already spent on repaying the mortgage for the home. It is still possible to sell a house or flat even after you’ve obtained some equity release, and this guide shows how to get a quick and fair offer for such properties.

1. What is equity release for a property?
2. The pros and cons of equity release
3. Can you sell a home with equity release?
4. Getting your house with equity release ready to sell
5. Four methods for selling a home with equity release
6. Frequently asked questions about selling a property with equity release

What is equity release for a property?

If you’re the owner of a freehold or leasehold property and have reached a certain age, you might be able to financially benefit from equity release, which is essentially obtaining funds based on the amount of money you’ve paid back for the mortgage you took out to buy your house or flat and the value of that property at the time you seek equity release.
In other words, you are essentially borrowing funds against the amount of money that you have already invested in the home. This means that if your house is currently worth £150,000 and there is a £50,000 balance remaining on your mortgage, your equity is valued at £100,000. That’s the sum you might be able to borrow if you meet certain mandatory criteria.
As a general rule, you must be at least 55 years old in order to qualify for seeking equity release, although in some situations the minimum age for obtaining it is 65 years old.
The other specific requirements that you must meet for equity release are that the property must have a value of at least £70,000, the property must be in a fair overall condition, the house for which you’re seeking equity release must be the primary place where you live and you have done so more than six months, and you must also be the legal owner of the property.
It can be a great way to have some extra money during your retirement, but some homeowners may wonder whether they are able to sell their house or flat after getting equity release.
Equity release dates back to 1971 and until 1991 the process was unregulated, according to Wikipedia. There are now two types of equity release; lifetime mortgages where you can get tax-free cash as a loan and either pay interest on an ongoing basis or as one final lump sum, or home reversion where you sell a share of your flat or house in exchange for receiving a lump payment, and continue to live in the property.
This guide explains the main advantages and disadvantages of equity release, and also offers advice on the possibility of selling your house or flat after you have obtained equity release.

The pros and cons of equity release

Before attempting to sell your house, it’s important to understand the pros and cons involved with equity release, and the effect that obtaining this money could have on your ability to sell the home.
There are a few benefits associated with getting equity release on your house, flat or other type of residential property before you attempt to sell it, and these can include:

• You will be able to obtain a lump sum, tax-free amount of money that can assist you in your retirement and financial planning, whether that’s using it to cover medical expenses, pay for holidays or for any other situation for which you need funds.
• Even after taking out the lump sum, you should be able to move to another property in the future and sell your existing home, as the next section of this guide explains.
• If you opt for the lifetime mortgage type of equity release then you will not only be able to obtain new money upfront, but you will also be able to continue living in your existing home until such time as you decide to seek a buyer for the property.

Although the above advantages help to explain why equity release can be popular for many older homeowners, there are also some disadvantages that are important to know:

• This type of borrowing can become quite expensive, and you should be prepared for having to pay a higher rate of interest compared to other types of loans. This can complicate your financial planning if the repayments become too costly.
• Equity release can have the effect of lowering the overall value of your property, as The Telegraph explains. It might also make it harder for you to qualify for some government benefits that are means-tested.
• The potential reduced value of your house or flat could therefore have a knock-on effect on any plans you might have for who should inherit the property in the future, resulting in less money that you would be able to pass on to the people named in your will.

Can you sell a home with equity release?

If you have already obtained equity release on your home, you will still be able to seek a buyer for the property, according to SovereignBoss, which offers advice on retirement care and financial planning.
The process should be fairly straightforward if the company that provided the equity release to you believes that the next home where you plan to move will provide enough security to cover the amount of funds that you borrowed at your current house or flat. In this situation, you should typically have the ability to transfer the existing debt from your equity release to the next home.
You might have complications if the home where you’re planning to live has a value below that of the property you’re selling, in which case your equity release provide might require that you pay them back a portion of your existing loan along with a set amount of interest.
The specific conditions of your equity release, including what happens if you’re trying to sell a property from which you have already obtained such funds, will depend on whatever legal agreement you signed with your equity release provider, so you should check with them.

Getting your house with equity release ready to sell

Before selling your house with equity release, you might want to consider pursuing some steps that could help to enhance the value of the property and maybe achieve a higher sale price.
First you should assess whether there are any major problems with the home that might need to be fixed before selling, such as extensive subsidence or any other large negative issue. You’ll have to decide whether you are prepared to invest the necessary time, effort and funds into repairing the problem before you attempt to try and find a buyer for the property.
Trying to sell a home "as is" in its current state without fixing such a prominent issue could result in some buyers lowering the price they offer for your flat or house, justifying the reduced amount based on what it will cost them to repair the problem as the home’s next owner. Resolving the problem before attempting to sell would prevent this scenario from occurring at all.
But many homeowners will not have the money, time or interest in pursuing such comprehensive work before attempting to sell, particularly if the costs would be very high or it would take many months to complete. If that’s your situation, then there are still some steps you can take that might help with making your property more attractive to prospective buyers.
Inside the home, you should make sure every room is free of clutter and looks as spacious as possible, because this can make properties appear more valuable. If you have pets then you should clean up after them and keep them locked away if you have any viewings, where potential buyers get to visit your property and walk through the interior and the exterior.
Outside the home, if you have a garden or other green space then you should mow it and remove and weeds. You may also want to replace any missing roof tiles, give your window ledges a fresh coat of paint and otherwise get the exterior looking in its best condition.
First appearances are crucial when it comes to selling a home, and buyers will likely be discouraged by a house or flat that is kept in a shabby condition. But a property that appears well-maintained could seem more valuable and worth a higher offer to many buyers.
Indeed, your property’s value could continue to rise even after you have obtained equity release, and this could benefit you when it’s time to sell the home, as the charity Age UK notes.

Four methods for selling a home with equity release

There are generally four methods available for selling your freehold or leasehold property with equity release, and they are selling with an auctioneer, selling to a quick buyer, selling via an estate agent or selling on your own, with pros and cons tied to each of the options.
Advantages of some of the approaches include the fact that quick buyers will only need a few weeks to finalise the purchase of a property, whilst disadvantages of other methods include the potentially expensive commission that you might have to pay an estate agent.
Write down your main goals with selling, including how much you, if anything, you can accept paying in fees, how long you are prepared to wait to find a buyer and your ideal selling price. Then compare all of this information against the specific details of the four methods below, and this should help you with identifying the approach that best pairs with your situation.

Selling with an auctioneer

Auctioneers will do the bulk of the work required for selling your leasehold or freehold property with equity release, starting with the development of a listing that describes the home and its main features and includes photographs of the exterior and interior. They’ll advertise this listing to generate interest from buyers, and they will also host the auction itself.
This is not a speedy way to sell a property, because there are delays involved, including waiting for many weeks or even months between when you decide to sell your property and when the auction takes place. If your property does manage to sell at the auction, the winning high bidder will then usually have at least 28 days to complete their required tasks such as signing the relevant legal paperwork, and some auctioneers may give the buyer even more time than that.
It can also be an expensive way to sell a home, because the auctioneer will charge commission, often as a percentage of whatever price you’re able to get for your house or flat. This fee will be subtracted immediately from the sale proceeds, which will add to your costs.
That’s why it’s very important to choose a reserve price – the lowest price at which you agree your home can sell – that should still generate a profit even after paying these fees.
A bid placed at just the reserve price is considered a binding legal agreement that you will sell your home to the winning high bidder, and they could sue you to enforce the sale if you attempt to walk away from it after the auction, so make sure you select a good reserve price.

Selling to a quick buyer

A quick home buyer is a company like LDN Properties, which makes competitive and speedy offers to purchase almost any age, condition, location, shape, size or type of freehold or leasehold residential, commercial and other property – including homes with equity release.
LDN Properties, for example, launched in 2003 and since that time has made many wide-ranging purchases throughout the UK that include not only properties with equity release but also houses with mortgage arrears, brownfield land, commercial property, self-build houses, development land, homes with thatched roofs, blocks of flats, houses with damp problems, uninsurable flats, properties with high ground rents, smoker’s homes, hoarder’s flats and many other varied scenarios.
They’re referred to as quick buyers because the average timeline for them finishing the process of buying a house or flat is just a handful of weeks. And this schedule includes the vital steps of paying the homeowner the sale proceeds and also exchanging contracts. It’s typically by far the fastest option possible for selling almost any type of leasehold or freehold property.
Another benefit of selling to a quick buyer is that the legitimate companies never charge homeowners any commission when purchasing their properties, which will assist you in reducing your overall selling costs. Compare that to selling via an estate agent or auctioneer, where you’ll have to pay commission that could significantly increase your total expenses.

Selling via an estate agent

Much like auctioneers take on the responsibility for most of the work involved with selling a property with equity release, the same is true of estate agents. They’ll prepare and advertise a listing, organise viewings for potential buyers and then hear any serious offers.
For doing all of this work, the typical estate agent will charge a homeowner commission based on whatever sale price they’re able to get for a property. This will increase your expenses because the fee is taken out of the final sale proceeds. If one of your top priorities with selling is keeping your costs low, you should consider other options.
This can also be quite a slow way to sell any type of property, and you should be prepared for waiting many months, or even more than a full year, before you get a serious offer. If you would like a speedier sale you should assess other options, such as using a quick home buying company like LDN Properties that could finalise the process within weeks after contacting them.
There’s also the risk that a buyer could withdraw their offer and not face any penalties, which they are allowed to do until contracts have been exchanged. If this happens, it will require you to start anew with trying to find a buyer, potentially adding many more months to the timeline.
Note also that some estate agents might try a sneaky trick of quoting a very high sale price estimate for your home, despite privately knowing that it will only attract offers at a much lower value. They do this in order to secure your agreement to use their services, so that they will be able to make money off the commission they’ll charge if they’re able to sell your home.
You can avoid falling for this trick in a few simple steps, which starts with asking multiple estate agents to give you free price estimates for selling your house or flat. Next, you should look on property sale websites such as Rightmove or Zoopla and write down the current and past sale prices of homes that are similar to yours. Finally, add up all these prices and calculate the average and this will give you a much more accurate estimate of your home’s possible value.

Selling on your own

Alternatively, you might want to consider selling your home with equity release on your own, which puts all of the responsibility on you for taking the steps to find a buyer.
This includes creating a listing for your property, advertising that listing, scheduling viewings to take potential buyers on a tour of the home, and fielding serious offers from buyers. It’s a massive amount of work and can be very stressful and take up much of your time. That’s why it’s only recommended if you have a friend or family member who is skilled in selling homes and is willing to help you for free, or if you have already have that type of experience.
Without that kind of knowledge, you could be waiting a very long time to sell your property and it could be more than a full year before you get an offer taken to the exchange of contracts.
And even if you get a genuine offer from a buyer, they could always withdraw that offer right up until just before contracts are exchanged, and they won’t face any penalties. This would force you to begin again with looking for a buyer, adding much more time to the schedule.
Selling on your own does have the advantage of not having to pay a third party like an auctioneer or estate agent any fees, but any saving you might make this way could be eliminated by the money you’ll have to spend on advertising your property.
Instead, think about selling to a quick no-fee home buyer like LDN Properties, because not only will you avoid having to pay any commission but you’ll also get a much speedier sale, typically seeing it completed within a few short weeks after you first get in touch with them. It’s a no-hassle, streamline and stress-free way to sell your home instead of doing so on your own.

Top queries and answers about selling property with equity release

Property owners thinking of selling quickly typically have some questions for us, ranging from the types of property we can buy through to selling an empty home. Here are some of the key questions we’re asked about selling a property with equity release: