Access to more flexible features
If you have taken out an equity release plan in the past, you may wish to review it from time to time to ensure you have the most suitable product for your current circumstances. With the potential for lower interest rates, a range of new flexible features and an increase in house prices, you may find switching your equity release plan could save you money or give you the potential to release more.
In early 2022, nearly one in four of the customers that Retirement Solutions provided independent equity release advice to already had an existing equity release plan in place. Our independent equity release advisers have access to the whole of market, so you can be sure we will find a plan best suited to your current and future needs. But what exactly are the benefits of switching to a new plan?
As equity release has grown in popularity over the years, so have the safeguards around it. Most equity release plans now come with 5 standards, some which may not be included in your current plan.
- A fixed (or capped) interest rate for life
- The right to remain living in your home for life
- The right to move the plan to another property (lender criteria dependent).
- A no negative equity guarantee
- The right to make voluntary penalty-free partial repayments
As equity release advisers we can recommend products that are approved by the Equity Release Council, and meet all their standards. You can read more on these features in our article ‘the features of equity release’.
Lower interest rates
Interest rates may have changed since the time you started your current equity release plan. This could mean your equity release plan is no longer as competitive as it once was. Switching your equity release plan potentially gives you the opportunity to:
- Lower your interest rate meaning you would accrue less interest in your loan over time
- Borrowing more if your house has increased in value
- Borrowing more as you are now older
- Leave more inheritance for your loved ones
Early repayment charges may apply when switching your equity release plan. An independent equity release adviser will be able to tell you more. The service we offer is a review service for customers who already have a lifetime mortgage. Our independent equity release advisers will be able to let you know if it’s more cost effective to stay with your current lender or to switch to a new lender.
How Mrs B switched and saved on her equity release plan
Our valued customers Mrs B decided to speak to an independent equity release adviser to see if she could save money on her current plan by switching to a new lender.
“I took out an equity release plan in 2010 at an interest rate that, at the time, was reasonable. However, as time went on, I became more and more concerned that at this interest rate there would be very little left for my children to inherit and saw no way to change the situation.
In 2021 I came across Retirement Solutions and discussed my current concerns with them.
The upshot is that a new provider was quickly found for me at a much lower interest rate meaning that taking my life expectancy as another 20 years there would be a saving of over £156,000 interest.
I would highly recommend ‘Retirement Solutions’. They are very professional, friendly, helpful and as their name states provide a solution.” – Mrs B
Important to note
- A lifetime mortgage is a loan secured against your home and subject to compound interest, meaning the amount you owe can grow quickly
- Equity release will reduce the value of your estate
- Equity release may leave you with limited or no property equity remaining
- Equity release may affect your entitlement to means-tested benefits
- Equity release will reduce your financial options in the future
Access to more cash by switching your equity release plan
One of the other reasons to switch your equity release plan is that you may be able to access more tax-free cash. If house prices have risen, the amount of equity tied up in your home may have increased. You may be able to access a higher amount of tax-free cash if your health circumstances change. Your Retirement Solutions equity release adviser will be able to provide you with more information.
Seek Independent Advice
If you are a retired persons contemplating fundraising from their property. You must recognise the significance of seeking independent advice. To help navigate this complex financial landscape effectively.
Whether considering downsizing, equity release, renting out property, or considering one of the other alternatives to equity release. Retired people like you must weigh the benefits and risks of each option in light of their individual circumstances and goals.
Independent advisers play a crucial role in providing retirees like you with the expertise, perspective, and guidance. Providing you with the balanced and unbiased information needed to help you make informed decisions, and help you secure your financial well-being in retirement.
By leveraging independent advice, you can confidently navigate the process of raising funds from your property. But there are no guarantees that you will be able to do so. Everything is subject to your personal circumstances.
