Buying a house with an equity release firm charge on it - nightmare?

[housemoveheadache]

Currently impatiently waiting for progress with our painfully slow house purchase. Offer accepted 6 weeks ago and no sign even of the contract pack so far.

Our sellers have some kind of equity release product on their home, taken out fairly recently. This recognises the equity release company as a proprietor of the estate (in addition to having a charge on the estate, like a mortgage). The sellers are downsizing, we understand, buying another home which is chain-free.

Does anyone have any experience of buying a property where the vendors have something similar? Is it a complete nightmare?

We are desperate to move and have super-keen FTB-ers buying our current home. It is a buyers’ market here so there are plenty of other options, for us, though we like this house a lot. But we would rather walk away than lose our buyers or get stuck for months on end.

No experience of buying a house where equity release was involved but can appreciate it has every chance of slowing down the process.

What I can recommend is that you go with your gut feeling and if you feel this house is going to prove problematical then for your own sanity, keep looking elsewhere.
Been there, done that and wish we had ignored our inept, lying, lazy EA who kept telling us we were "almost there" when in actual fact they knew full well that we were nowhere near.☹️

Yes, those are my concerns. This will be my fourth purchase and experience tells me that delays at this early stage are not an encouraging sign, especially with a short chain. The system sucks.

We sold MIL's house which had one and that wasn't the element that dragged out that sale (it was the bloody buyer who claimed to be a cash buyer but wasn't because he had his own mother's house to sell first)

I would ask the advice of your solicitor @housemoveheadache as to whether the equity release element is likely to slow things down or be problematic

I sold a property with an equity release on it and it was fine. Didn’t affect the buyer at all. On sale day when the funds were paid, my solicitor made the transfer to the equity release company when she paid all the other bits off (management company for ground charges, etc etc). It only took ages because probate took ages

I would have thought it would be just like dealing with a mortgage company, they give a redemption statement and the sellers solicitor agrees to pay them off on completion. It shouldn’t cause long delays but I would discuss etc your solicitor if you are concerned. There may be other reasons holding things up.

We sold a property with an equity release charge on it and it didn’t affect the process at all. We had a crap solicitor and Covid hit a month or so in, but we were never aware of the equity release firm affecting anything - we wouldn’t have known they were involved as the solicitor “dealt” with everything.

I sold a relatives house that had a charge on it (LA, for disability modifications).

It was really simple.

The solicitor liaised with LA, and as part of the completion contract paid the due amount from the proceeds of the sale in return for a document saying the charge was removed. It didn’t hold anything up and didn’t affect the buyers at all.

The Equity Release company will be geared up for this process.

I would get your solicitors and the estate agent to find out what is going on and give you an update

I would guess that if your vendors are buying somewhere chain free it is either a probate property and they are waiting for probate, or it is a new build… and they are waiting.

No reason that the charge would hold things up.

Are there other properties in the market you could buy? That would be less waiting?

Thanks so much for all these replies - very helpful and encouraging on the equity release front. Sounds like the delays are the vendors being slow and unresponsive (their EA is also not the best, based on our experience so far). No probate property/new build involved.

The house is the nicest by far that we have seen, or we would have got fed up sooner (there has been some other faffing, and we are not their first buyer - sorry for a drip feed, but we can’t be sure the previous buyer dropped out due to delays).

Looks like we just need to hound the EA to hound the vendors, as it seems the delay is sitting with them not their solicitor. I think we give it another week and see where we get to.

Thanks all- much appreciated.

It shouldn’t make a huge difference.
it could be any number of reasons for the hold up. I would push your solicitor hard to get an update. An equity release mortgage is just a mortgage essentially (and before people come at me, I work in the ER sector). If they’re down sizing they are likely porting it across as you do with a standard mortgage.
I would ask the estate agents to chase as that’s their job too. If you pull out it makes extra work for them. Ask why it’s taking ages. Has your sellers purchase fallen through and no one has told you? Are they using a factory “law” firm.

My experience of someone else further up my chain having to deal with an equity release mortgage has really slowed things down. As I understood it from the EA for the property we're buying, it was the back and forth between their solicitor and the lender, and I assume also slow responses from the couple who got the ERM.

We got stuck in limbo, waiting to exchange for almost a month while every other party in the chain was ready. At one point we'd been discussing a tentative completion date, only to be told just before we all had planned to exchange that they weren't ready as the lender had come back and raised points that they needed to resolve via their solicitor. It was only when the lady who was buying the house from the couple with the ERM decided to break the chain that we have now exchanged and are completing next week.

I'm grateful that she was willing to do this to move things along for everyone else, but feel bad that she now still has to wait for her purchase for god knows how long...

Thanks @bottomofthechain, this is the sort of thing I feared.😔 The delays, combined with the complete radio silence, do not bode well.

As others have said, it's effectively just a different type of mortgage (they're also called "reverse mortgages") so it should be fine.

They have a clause that means the estate doesn't owe any more than the value of the house if that is less than the outstanding loan value, so in that case I imagine it could really slow things down as the equity release provider stands to make a loss. In your case though, if they've only taken the product recently it should be absolutely fine from that point of view.