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
Are You Considering Switching Equity Release Plans? Learn About the Fees You Need to Consider & Who You Can Turn To for Assistance. Read This So You Don’t Get Caught.

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Listen up: If you released equity before 2020, it’s likely you’re paying more interest than necessary and you should look at switching equity release plans!

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.

In this article you’ll learn:

  • Can you switch equity release plans?
  • When can you switch equity release plans?
  • How to switch equity release plans?
  • What fees & factors should you consider when switching equity release plans?
  • Are you eligible to switch equity release plans?
  • Can you switch your equity release plan to a new home?
  • Can you save by switching equity release plans?
  • What are the pros & cons of switching equity release plans?
  • When is switching equity release plans & providers a good idea?
  • Which equity release providers should you consider when switching plans?

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 2022.

Let’s find out now!

TABLE OF CONTENTS

Can You Switch Equity Release Plans?

Yes, you can switch your equity release plan. You’ll need to speak to your financial advisor to look at your options.

Why Switch Your Equity Release Plan?

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

When Can You Switch Equity Release Plans?

You can switch equity release plans whenever the need arises by contacting a whole market financial advisor.

What Are the Pros & Cons of Switching Equity Release Plans?

The pros and cons of switching equity release plans include that you can receive better rates, but you could switch to a deal that ends up offering fewer benefits.

Here’s more information.

Pros

The pros of switching to a better equity release plan include:

  • Save with a better interest rate.
  • Access more money from your property.
  • Find a more flexible plan.
  • Take advantage of your increased property value.
  • Save more money following a life event.
  • Guaranteed repayments have now been included in all lifetime mortgage plans.

Cons

The cons of switching equity release plans include:

  • Potentially ending up with a worse deal than before.
  • Not finding the right advisor to assist you, or selecting the wrong person.
  • Choosing the wrong deal.

What Fees & Factors Should You 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.
  • New Charges – These charges may arise due to new and exciting features that are included in a new equity release plan. Examples of these include inheritance and downsizing protection.
  • 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 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 worthwhile. If you unlocked equity in March 2021, interest was the lowest ever so you may not get a cheaper plan.
  • Early Repayment Charges (ERCs) – Some plans have a penalty for paying your mortgage off earlier than expected.
  • Equity Release Council (ERC) Standards – The ERC sets standards that providers have to adhere to, which may result in you incurring costs. 

Before You Keep Reading….

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Am I Eligible to Switch Equity Release Plans? 

You’re eligible to switch equity release plans if your current plan and lender permit. 

You can contact a whole of market adviser or your lender to discuss the eligibility criteria, which may differ across plans.

How Do I Switch Equity Release Plans?

To switch equity release plans, you can follow these 7 steps:

  1. Contact your financial advisor.
  2. Enquire if your current plan gives you the option to switch.
  3. Find out if your current plan has early repayment charges.
  4. Consult a few lenders to find new plan options.
  5. Discover if making the switch is financially viable or not.
  6. Go through the paperwork process to get an updated valuation and proceed accordingly.
  7. Switch to your new plan and continue to enjoy your life!

When Is Switching Equity Release Plans & Providers a Good Idea?

Switching equity release plans and providers is a good idea if your current provider isn’t a member of the Equity Release Council.

Additionally, if you’re looking to take advantage of interest rate differences and new features, you should make the switch.

Which Equity Release Providers Should You Consider When Switching Plans? 

When switching equity release plans, you should consider providers who are regulated by the Financial Conduct Authority (FCA) and are members of the ERC.

Some of the top equity release providers in 2022 include Aviva, Canada Life, One Family and Legal & General.

Common Questions

Can I Change My Equity Release Provider?

Can You Take Out Equity Release Plans More Than Once?

What Happens if My Equity Release Provider Goes Bust?

Can I Change My Equity Release Plan?

Can You Get Out of Equity Release?

Can I Switch My Equity Release Plan to a New Home?

Can you save by switching equity release plans?

In Conclusion

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

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

Are you ready to make a change? Speak to your financial adviser about switching equity release plans today!

Before You Go…

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Editorial Note: This content has been independently collected by the SovereignBoss 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.