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Moving home with a lifetime mortgage

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Article written by Mortgage Advice Bureau Later Life, our preferred independent advice firm.

This article is not intended to be financial advice to any individual. The views expressed are those of the author and Moneyfactscompare.co.uk does not endorse the content.

Equity release offers homeowners, aged 55 and over, a way to access some of the value of their property, providing them with in retirement. A lifetime mortgage is a type of equity release, a loan secured against your home that only needs to be repaid when you die or go into long-term care. But what happens if you decide to move home but have already taken out a lifetime mortgage?

Porting your lifetime mortgage to a new property

With a lifetime mortgage you have the option to move whenever you’d like. If you have a lifetime mortgage you could look to transfer your plan to a new property. This is known as porting, and it begins with a survey on the new property and solicitors being instructed.

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You always have the right to move to another property, as long as your provider is happy that your new home will put up sufficient collateral.

In addition, you may need to pay an upfront, non-refundable valuation fee, and there may be additional fees, such as covering your and your lender’s legal costs.

Taking out a new lifetime mortgage plan

Instead of porting, you could take out a new equity release plan, which would mean that your interest rate will likely change. This may also include benefits like free property valuations but could incur early repayment charges.

Discussing the implications with your equity release adviser is essential to ensure your decision aligns with your needs.

Criteria to consider when moving

It is important to note that not all properties will meet the criteria for equity release. This could include:

  • Non-standard construction
  • Age restrictions
  • Short remaining leaseholds
  • High flood risk
  • Properties in need of significant renovation

Be sure to check with your lifetime mortgage provider in the first instance whether your new home meets the lender’s requirements.

Is your new property cheaper?

If you decide to move to a property that has a lower value than your current home, you may need to repay a portion of your lifetime mortgage to your lender.

While the calculations may not always be simple, a hypothetical example could look like this:

If the new property is worth half the value of your existing home, you may have to repay of the amount owed. This accounts for the reduced security for the lender. However, with the proceeds from selling your existing home, these repayments should be . That being said, it depends on how much compound interest has accrued on your lifetime mortgage, and there may not be any value left in your current property to put towards a new one.

Deciding not to transfer your plan

If you choose not to transfer your lifetime mortgage to your new property then the plan will need to be repaid, which will likely incur an early repayment charge.

There are plans out there that offer downsizing protection, which means you can repay your loan in full without an early repayment charge if your new property doesn’t meet the lender’s criteria. Downsizing protection time frames may vary from lender to lender, so it’s worth checking to see whether this feature starts from day one, or if it starts a few years into your lifetime mortgage. This is why it’s essential to have a good understanding of what the specifics of your plan entails – something which can be discussed with your equity release adviser.

The ins and outs of moving home with a lifetime mortgage

You can move home with a lifetime mortgage, and some of the options available to you will fit your circumstances better than others. The process of moving house with a lifetime mortgage may involve factors such as upfront fees, legal advice requirements and, unless you are porting your plan, early repayment charges.

Speak with your lender to find out if you can port your lifetime mortgage to begin with, and if you decide it is something you want to do, remember to get clarity on the criteria for transferring your lifetime mortgage to a new property from your lifetime mortgage provider.

Things to consider

Mortgage Advice Bureau Later Life offers lifetime mortgage products from a carefully selected panel of providers. Mortgage Advice Bureau Later Life offers lifetime mortgages only, which is a loan secured against your home.

Equity release will reduce your estate’s value and may affect your entitlement to means-tested benefits. A lifetime mortgage may result in limited or no property equity remaining and will reduce your financial options in the future. Unless you decide to go ahead, Mortgage Advice Bureau's Later Life service is completely free of charge, as their advice fee of £1,295 is only payable on completion of a plan.

Telephone calls may be monitored or recorded to enable us to improve our service to you. Mortgage Advice Bureau Later Life is a trading name of Key Retirement Solutions Ltd, which is authorised and regulated by the Financial Conduct Authority. Registered in England No.02457440. Registered Office: Baines House, 4 Midgery Court, Fulwood, Preston, Lancs PR2 9ZH.

Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

Moneyfactscompare.co.uk will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by Moneyfactscompare.co.uk will always be from news@moneyfacts-news.co.uk. Be ScamSmart.

Moneyfactscompare.co.uk will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by Moneyfactscompare.co.uk will always be from news@moneyfacts-news.co.uk. Be ScamSmart.