Are you paying dramatic interest rates on your current equity release plan? Have you been considering to switch equity release plans but you’re unsure how to go about it? Read more to find out how much money you can release if you change plans! Well, we’re here to help.
But, what’s equity release exactly?
Equity release refers to your property’s items/parts that let you access your money tied up in your house. However, you can only gain access once you’re 55 years or older. You can get the capital value of objects in your home as a lump sum or an income based on the house’s value. You’ll just need to repay that money you accessed at a later stage.
There are two kinds:
1. Lifetime Mortgage
The first type of equity release is a lifetime mortgage. This type lets you take out a mortgage on your home if it’s your primary residence. However, you will remain the owner. You’ll have the option to ringfence part of your property for your family to inherit.
You can also make repayments or let the interest increase. Better yet, if there’s any loan amount or any accrued interest, it’ll be paid back when you pass away or need long-term medical care.
2. Home Reversion
The second type is a home reversion, which means you sell some of your property or your whole property. You can sell it to someone like a home reversion provider, and they’ll pay you a lump sum for it, but they can also pay you in regular payments. It’s your choice.
What’s an Equity Release Plan?
An equity release plan offers homeowners who are of retirement age (55 years and older in the UK) a chance to let go of some of the money tied up to their property. In this way, there’s no need for a retired person to seek a new home after retirement.
The number of funds that a homeowner can release is determined based on the value of the home. (Before taking out a plan, a professional will be sent to your home to evaluate it.) There are so many different plans out there, each tailored according to other specifications and providers. You’ll need to look at all of them to see which one works best for you.
If you took out an equity release plan many years ago, you probably want to change it up for something new. The most recent equity release plans give you several reasons to change: free valuations, cashbacks and some offer no application fees.
When to Switch Your Equity Release Lifetime Plan?
In recent years, many more features have been added to equity release plans; including downsizing protection. So, you can switch to a provider that offers this feature if your current provider doesn’t.
If your initial or current equity release plan doesn’t come with other necessary features, it could also be time to make a move and reap the full benefits of the innovative features. In the end, you need to get what you deserve.
Let me tell you something…
You need to read up on all the new services included in current equity release plans. If you know more than you did in the past, you can add Drawdown Equity Release into your plan with the right provider.
Many of the older equity release plans didn’t allow plan holders to borrow additional funds to remortgage the equity release plans that they already had. For homeowners looking to do the switch to borrow extra cash – a change in your equity release plan may surely be all the more desirable. Providers are now allowing additional funds to be remortgaged, which can be in your advantage.
Follow these easy steps to switch plans:
1. Assess Your Current Equity Release Plan
Check the current interest rate of your equity release plan. If you’re satisfied, then there’s no need to switch. If you’re unsatisfied, read on.
Take a look at this scenario:
Have you found that other companies are offering equity release plans at a much more competitive rate?
So, the interest rate that you’ve become accustomed to from 5 years ago may now be too high in comparison to the average interest rate of many other plans. Switching your equity release plan may be your means of saving money in the long run. More significant savings means more possibilities!
2. Calculate Your Way Towards A Better Plan
So, how can you ascertain if it’s indeed time to change your lifetime mortgage?
Well, you can use a variety of online equity release calculators to show you what interest you’ll be paying. Again, remember that the calculator will give an estimated interest amount, and this may differ slightly from the total amount you will have to pay.
Best of all:
You can also rope in a financial adviser who will provide reliable advice on whether the switch is a good idea or not.
You can calculate your equity release plan vs the different equity release plans using the free online mediums. Even though the online equity release plan calculators provide accurate information, you will still severely benefit from seeking professional advice and more information on newer equity release plans.
When It Comes to Switching Plans
So, for those who might still be uncertain about all this, we’ll tell you why it’s a good idea to switch lifetime mortgage plans and how much you’ll get after switching.
Best of all:
The voluntary repayment lifetime mortgage plan, for example, is there to help you get more value out of your loan. The mortgage plan is a very recent innovation for equity release, and it gives you so much flexibility to manage your equity release plan’s balance in the coming years. Because they allow you to make up to 15% of your original balance repayments annually and whenever you choose to or have the money available to make those repayments.
If you can make monthly, annual or ad hoc repayments of any amount, then the total repayable amount at the end will be considerably lower than without repayment.
You can calculate much cash you’ll save up with the voluntary repayment plan using the equity release switching calculator. We’ll guide you through the steps. But first…
What Should I Consider Before Switching My Equity Release Plan?
As with other financial products, there are a few costs that go with switching an equity release plan1. So, you’ll need to weigh your options before switching from one plan to another. Consider the following points:
- Look at the early repayment charges2 (or ERCs). In the past, older mortgage plans had big ERCs because they weren’t made with early repayments in view. Your financial adviser will need to check these out for you. It might not be in your best interest to switch plans now.
- You should look at all the costs involved with switching from one plan to another. Applying for a new equity release plan will have other potential charges. The extra costs will depend on the loan that you want to change to. According to most financial advisers, these costs are roughly £2,000 maximum.
- Look at the interest rates. If you change your lifetime mortgage, you’ll continue paying daily interest on your initial mortgage throughout your application process. Your financial adviser can help calculate 60 days interest when you want to determine the exact amount needed on the application.
So, you might be asking yourself…
How can I calculate the exact amount of money you’ll end up with after you’ve switched equity release plans? Well, you’ll use the Equity Release Switching Plans Calculator. It asks you to input the details of your initial mortgage plan. With that information, it’ll estimate your balance and compare it with other equity release plan rates that are out there. Your results will display in an easy-to-read format.
The results will show you a year-by-year comparison between your initial plan versus your new plan. That way, you’ll see when you’ll profit from switching the equity plan and how much money you’ll get in the end.
Yes, you can with the Equity Release Switching Plans Calculator. It asks you to input the details of your initial mortgage plan. With that information, it’ll estimate your balance and compare it with other equity release plan rates that are out there. Your results will display in an easy-to-read format.
It’s a calculator you can use to see how much money you’ll get out of your loan when you switch plans. It compares different plans over a period for you to know the amount you’ll end up with.
It takes the current equity release plans and compares it to other plans on the market. The value of your home and your age also affect the outcome of the calculations, of course.
Yes, it’s safe and accurate; you just need to input the correct information. The results will show you a year-by-year comparison between your initial plan versus your new plan. That way, you’ll see when you’ll profit from switching the equity plan and how much money you’ll get in the end. Your information won’t be shown or given to third parties either.
Switching from one equity release plan to another can be daunting and risky. However, with the help of this beautiful calculator, you’ll be able to determine if it’s the right option for you and your future.