Switching Equity Release Plans in 2022

Do You Want to Switch Your Equity Release Loan?
Contributors: Nicola Date, Katherine Read. Edited by Rachel Wait & Reviewed by Francis Hui
Here You Will Find the Most Extensive and Useful Advice For Switching Equity Release Plans. Contact Us For More Information on How to Navigate Shares.

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Listen up: If you released equity before 2020, it’s likely you’re paying more interest than necessary!

Equity release interest rates were around 6% just 5 years ago, and boy have things changed!

By switching plans, you could save your family a fortune when your property is sold.

By working through this article:

  • You’ll learn the 7 steps to switching your equity release mortgage.
  • You’ll discover if switching plans is right for you.
  • Finally, you’ll have the tools to decide if switching equity release plans is worth the effort in May 2022.

As experts in the field, we’ve looked at more than 220 equity release plans available today and compared them to offerings of the past.

Whether you’re undecided or not, if you’re looking to potentially switch up your equity release plan, you’ll need to know what steps to take in May 2022.

Here they are!

What’s Equity Release?

Equity release is a range of products that let you access the equity (cash) tied up in your home if you are older.

You can take the money you release in a lump sum, drawdown, a combination of both, or a monthly salary.

The loan, plus interest, is repaid from the sale of your home when you pass away or enter long-term care.

Before you continue, we’ve summed up the most important information about equity release in this quick video.

Check it out!

Switching Equity Release Mortgages Effectively in 2022

You can switch equity release mortgages effectively in 2022 by contacting a whole market financial adviser.

With lower equity release interest rates, a larger selection of plans, and further industry growth, most people wonder if they can switch their equity release plan for a more suitable one.

With shifts in the market, it might just be worth the effort.

What’s Changed?

Thanks to the Equity Release Council1 and Financial Conduct Authority2, you can switch to a better plan if you wish to.

It’s your money, your choice, and no one can stop you from making the best decision for your future.

Lucky for you, there are so many to choose from, so you’ll definitely find one that suits you perfectly.

But, first!

It’s not that straightforward switching to a new lender or even a new equity release mortgage.

For the switch-over to be viable, it’s crucial to consider several factors, including the early repayment charge clause.

An early repayment charge is a penalty that applies to specific equity release plans.

Some equity release schemes charge a fixed percentage based on the total amount borrowed, but the percentage can also be on a scale.

For example, you might pay 5% for the first 3 years, 3% for the next 5, and nothing after that time.

As if that’s not enough.

You’ll need to have a thorough look into every equity release company in May 2022 and see what they charge for everything.

Such a high penalty can make the switch-over entirely unviable, even if the interest rates are significantly lower.

That’s not something you want to happen.

The New Guaranteed Right for Voluntary Repayments on Lifetime Mortgage Equity Release Products

The new guaranteed right for voluntary repayments on lifetime mortgage equity release is one of the biggest shifts in the equity release industry is the Equity Release Council’s announcement that as of 2022 about .

As of 31 March 2022, all lifetime mortgage lenders must offer homeowners the right to make loan and interest repayments, stopping and starting when they wish.

This can be the monthly interest and between 10% and 40% (Lender dependent) on the loan annually.

If repaying your equity release would be ideal, you may want to review your plan, as guaranteed repayments will only be implemented on new plans.

What Fees Do I Need to Consider When Switching Equity Release Plans?

The fees you need to consider when switching equity release plans are valuation fees, application fees, and solicitor’s fees.

Here’s more information:

  • The Valuation Fee – These costs are usually paid upfront on your application and are dependent on the state market value. The higher the property valuation, the more costly the valuation fees. Therefore, you must look for equity release companies that offer a free valuation to avoid upfront fees.
  • The Application Fee – The plan provider typically deducts the fee from the lifetime mortgage proceeds upon completion. Some equity release firms will add the fee to the loan but remember it will attract compound interest.
  • The Solicitor’s Fees – As part of SHIP rules, you’ll have to consult a legal adviser who’s separate from the mortgage provider. The solicitor will help you understand all the legal requirements of the equity release mortgage. It’s important to remember that solicitor’s fees are unavoidable, but shopping around will help you find an excellent deal. Find a solicitor you can trust and with whom you feel most comfortable.
  • The Interest Rates – Most importantly, you must look at the new plan’s interest rates to determine if shifting is worth while. If you unlocked equity in March 2021, interest was the lowest ever so you may not get a cheaper plan.

Who Can You Turn To?

You can turn to a professional financial adviser for assistance to switch equity release plans, as per the Equity Release Council’s standards.

Find one that has expertise in equity release plans.

They’ll offer you objective and valuable equity release advice on the various mortgage providers and loans, and they can also help you get equity release with a mortgage.

So, What Are The 7 Steps in May 2022?

  1. Contact your financial adviser.
  2. Enquire if your current plan gives you the option to switch.
  3. Learn if your current plan has early repayment charges.
  4. Consult with a few lenders to find new plan options.
  5. Discover if making the switch is financially viable or not.
  6. Go through the process of the paperwork, an updated valuation, and anything further required.
  7. Switch to your new plan and continue to enjoy your life!

Got Questions? Check These First

Can You Switch Your Equity Release Plan?

Can You Save Cash by Switching Your Equity Release Plan?

In Conclusion

Switching equity plans is a fairly simple process, and it can help you save money in the long run!

If you’ve been stuck with an equity release provider that you’re unhappy with, charges too many fees, or has high interest rates, you should switch today.

Consider all your options and all the different providers in May 2022, including their prices, payments, and rates to choose the best one for your future.

Most importantly, if your current plan provider is not a member of the Equity Release Council, you must switch today!

Are you ready to make the switch? Speak to your financial adviser today!

Plans are regulated by the Financial Conduct Authority, which means advisers and product providers are obliged to adhere to published standards regarding their knowledge and the way they run their businesses.

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Editorial Note: This content has been independently collected by the SovereignBoss advisor team and is offered on a non-advised basis. Sovereignboss may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations. Learn more about our editorial guidelines.

rachel w

Rachel Wait
Personal Finance Journalist

Rachel is an experienced finance journalist and editor with a particular interest in personal finance and consumer affairs. She has vast experience writing about money issues, property, insurance, and consumer affairs, and you’ll find her articles regularly featured in top media and newspaper publications.
John Lawson

Written by
John Lawson
Founder SovereignBoss

John is passionate about education and has made it his life-long mission to assist UK citizens on their future financial options, with a specialist interest in equity release, and SovereignBoss is the natural extension of this passion.

Reviewed by
Francis Hui
Senior Risk Manager

Having held various high-level roles across the industry, Francis is truly an expert in aiding UK citizens in their financial decisions and risk analysis. His unique insight and statistical knowledge make him the perfect person to help you take your financial future to the next level.
kath icon

Katherine Read
Consumer Affairs Writer

Since joining the editorial team at SovereignBoss, Katherine has become focused on bringing transparency to finances and opportunities for those approaching retirement age. She writes on the topics of equity release, home reversion, and mortgages.

Nicola Date
Writer & Journalist

Nicola is a financial writer for SovereignBoss and is passionate about the opportunities that equity release can open up for homeowners. Her extensive business experience and deep understanding of the industry means that she’s always up-to-date with the latest developments.

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