Switching Equity Release Plans in Oct 2021

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Switching Equity Release Plans: 7 Steps to Saving a Fortune!

Listen up: If you released equity before 2020, you’re likely 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 Oct 2021.

As experts in the field, we’ve looked at over 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 Oct 2021. Here they are!

What Is Equity Release?

Before you do so, we’ve summed up the most important information about equity release in this quick video. Check it out!

Switching Equity Release Mortgages Effectively in Oct 2021

With the lowest ever equity release interest rates and a larger selection of lifetime mortgage schemes accessible today, most people wonder if they can switch their equity release plan for a more convenient one. With shifts in the market, it might just be worth the effort.

What’s Changed?

Thanks to the Equity Release Council and Financial Conduct Authority, 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. And, 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 (ERC) is typically a penalty that applies to specific equity release plans. While most mortgage providers are looking more carefully into the early repayment charge, they didn’t do so a few years back.

As the years went by, the actual charge varied from one loan policy to another. Most equity release schemes range from a fixed percentage charge of 5% of the sum repaid up to as high as 100% of the total amount borrowed.

As if that’s not enough.

You’ll need to have a thorough look into every equity release company in Oct 2021 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.

What Other Factors Do You Need to Consider

What Other Factors Do You Need to Consider?

Well, like the early repayment charges, you also need to take into account elements like the:

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 since there won’t be upfront fees.

The Application Fee – The plan provider typically deducts the fee from the lifetime mortgage proceeds upon completion. Some equity release firms will include this. However, it might eventually attract compound interests.

*Pro Tip – Some equity release companies won’t charge you an application fee, which helps cut down the set-up costs. So, it’s imperative to compare equity release quotes first to get the best equity release deal. You don’t want to kick yourself later when you realise there is a better provider with fewer costs involved. You want to make sure you get the best price with the least extra fees and payments.

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. Therefore, you’ll benefit from shopping around to find an excellent deal. Find one you can trust and with whom you feel most comfortable.

The main factor you need to consider, however, is the interest rates. In general, interest rates are lower in the current market climate than a few years back. With the increasing popularity of the equity release schemes, mortgage products are becoming more competitive. This, in turn, vastly assists to reduce interest rates. Better yet, you’ll be saving so much money in the long run!

Who Can You Turn To

Who Can You Turn To?

As per the ERC’s standards, the best person to consult in Oct 2021 is a financial adviser. 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.

At the end of the day, it’s easier and more time-effective to be assisted by someone who knows all about equity release plans.

The advisor charges a flat rate for their services, taken into account when calculating the setup expenses for a new equity release mortgage. The best equity release advisers are independent since they have access to the whole equity release market.

Better yet…

They conduct research and help you find the best equity release remortgage deals, which can include incentives like a free valuation, cashback, or even no application fee with some plan providers.

Can One Borrow More Capital?

Can One Borrow More Capital?

Yes, you can borrow more capital if you need to. Great, isn’t it? Older mortgage plans were inflexible, as there were no drawdown lifetime mortgages. Thus, if you’re looking to borrow some supplementary finances to remortgage your equity release loans, you can find flexible, reliable, cost-effective plans, with better interest-rate deals.

Best of all:

You can also borrow more capital, especially with mortgage deals that focus on health and lifestyle. Equity release has come a far way and has improved so much.

Moreover, to figure out how much you can release with an equity release mortgage, you can efficiently use our equity release calculator. To do this, you’ll have to input:

  • Your postcode – you need to own an estate in the UK.
  • The youngest homeowner’s age – who needs to be aged 55 and above (the older you are, the more capital you can borrow).
  • Your property market value – your residence needs to be valued at more than £70,000.
Switching Equity Release Plans

So, What Are The 7 Steps in Oct 2021?

  1. Contact your financial adviser.
  2. Inquire if your current plan gives you the option to switch.
  3. Learn if your old 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 paper work, 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, asks for too many fees and extra charges, or has high-interest rate, then you should switch today.

Consider all your options and all the different providers in Oct 2021, 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.

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.

Contributors: Nicola Date, Katherine Read
Reviewed by Francis Hui

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Have You Read Our Most Popular Equity Release Articles?


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Written by
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.
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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.

Written 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.
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Written by
Katherine Read
Financial Planning Reporter

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.

Written by
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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