Selling Home While On Equity Release – Here’s What To Do

Owning a home can give you access to money later on through the equity it builds. Equity release lets you access this wealth without needing to sell your property right away. But what if you eventually want or need to move? What happens to the equity in your house when you sell? Let’s explore how equity release works and what to consider if selling or moving is in your future.

What Is Equity Release and How Does It Work?

Equity release gives you a way to access money without giving up the keys to your home. It’s usually an option for folks 55 and older who either own their home outright or owe much less than it’s worth.

There are two main routes people take when considering an equity release property:

1. Lifetime Mortgage

This is the go-to choice for most. Think of it as a loan that uses your home as collateral. There’s no need to make monthly payments; interest adds up gradually and gets settled all at once later. The loan is usually repaid from the sale of your home after you move into care or pass away.

2. Home Reversion Plan

This one works a little differently. You give up a portion, or all, of your home’s ownership to a provider in return for a lump sum or steady income. Even so, you can stay in your home for life without paying rent. When the home eventually sells, the provider collects their share based on what they bought.

These options can offer real relief when it comes to covering retirement costs or major expenses. But they’re not short-term solutions. Once you go down this path, decisions like moving or selling come with extra steps and sometimes limitations. It’s not just about accessing funds today. It’s about understanding how that choice shapes your future.

Selling a Home with Equity Release

Many people ask if they can still sell their home even if it has an equity release. Yes, you can, but there are important conditions to know.

If you have a lifetime mortgage, the outstanding loan and interest must be repaid when you sell. This usually happens when the homeowner passes away or moves into care. However, if you choose to sell before then, you can do so, just be prepared to settle the debt from the sale proceeds.

With a home reversion plan, it’s more complicated. Since you’ve already sold part of your home to a provider, they’ll need to agree to the sale. The money from the sale is then divided between you and the provider based on the percentage each of you owns.

In both cases, the amount you walk away with depends on how much of the equity you’ve used and how much the home sells for. If your home has appreciated, you might still come out with a good portion of the sale proceeds.

What Happens to the Equity in My House When I Sell?

When your property sells, the first step is settling any loans attached to it. If you’ve used equity release, the provider is repaid from the sale amount. What’s left after that is your remaining equity.

For example, suppose your home sells for $400,000, and your equity release balance is $180,000. After paying that off, your remaining equity is $220,000. That amount goes to you or your estate.

But keep in mind, interest can grow fast on a lifetime mortgage, especially if you haven’t made any repayments over time. The longer the loan lasts, the more it can reduce your final share of the home’s value.

When it comes to home reversion plans, your share of the sale matches the part of the home you still own. So if you sold half of it to the provider, you’ll only get half of the final sale price.

Knowing how much equity you’ll walk away with matters more than most people think. It’s not just about selling, it’s about making sure the trade-off makes sense for your long-term goals. Before you commit to anything, make sure the numbers work in your favor.

A House Full of Options, Not Regrets

Your home is more than just a financial asset, it’s where your story unfolds. Equity release gives you the chance to enjoy your wealth today, but it also shifts how you plan for tomorrow. But if you are planning to sell your home, the most important step is to stay informed. The right choice isn’t about squeezing every pound from your property. It’s about making decisions that match your goals, protect your peace of mind, and keep you in control of your future.