Reviewing Your Equity Release Plan in 2022

Have You Reviewed Your Existing Equity Release Plan Yet?
The Equity Release Plan Is a Complicated and Confusing Topic for Many, but It Doesn’t Have to Be. We Look at Why You Must Review Your Current Equity Release Plan & How You Can Save a Fortune By Doing So

Reviewing Your Equity Release Plan: Tips for Retirement

It’s natural to want to live out your retirement years in peace and security, but you need to make sure that you have the right financial plan in place.

One thing that many people overlook when they are considering their options is equity release plans.

Equity release plans provide a way for retirees who own property or land with some value on it to access this value for specific purposes such as paying off debts, funding future care needs, and more.

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What Is Equity Release & How Does It Work?

Equity release is a way to unlock some of the value in your home while you’re still living there.

You can use this money for anything that you want. It might be a younger child going to college, paying for medical expenses, or anything else that you want.

The earlier you do this, the better because your home is likely to be worth more later on in life than it was when you first moved into it.

Types of Equity Release

  • Lifetime Mortgage – A lifetime mortgage is a form of equity release that uses the value in your home to pay off an existing debt like a credit card or line of credit. You will still own and live in your property, but you won’t have to make any payments on this loan until after you die, when it’s time for repayment.
  • Home Reversion Plan – A home reversion plan is a way to sell off part of your house and then pay yourself for it with the money you receive. This option has become very popular recently because people like the idea that they will be paid back for something originally theirs, as opposed to having their property sold from under them so someone else can profit from all the years of effort put into owning it.

Re-evaluate Your Equity Release Plans

A major life event can have a large impact on your finances, and one of the most important decisions you’ll make is how to fund it.

For many people, an equity release plan offers a flexible way to get cash when they need it without having to sell their home or other assets.

But what are the risks?

What if interest rates rise?

The equity release plans that you currently have in place may not be the best ones for your life situation.

There are many types of equity release and they all offer different benefits and disadvantages.

If any of these factors affect you, then it is time to review your equity release plan.

Advantages of Reviewing Your Plan

Here are the top 5 reasons to review your current estate release plan:

  • It’s possible that you’ll be able to reduce your present interest rates. This implies that when you pass away or enter permanent care, your estate will owe less on your debt.
  • With rising property values, you may be startled to hear that your home’s value has increased significantly, implying that you have more equity to tap into.
  • You may be able to take advantage of previously unavailable benefits such as a drawdown facility or inheritance protection.
  • You might be able to purchase a plan with better terms and conditions now that the industry is tighter than ever.
  • If you don’t already have one, look for a plan that guarantees no negative equity.

Equity Release Market Today

Equity release interest rates are currently at an all-time low.

Depending on your circumstances and the value of your property, you could get rates as low as 2.3%.

The typical equity release interest rate is roughly 2.5%, which is significantly lower than what you’d see 5 years ago.

Assume you borrow £50,000 and don’t make any repayments.

Let’s take a look at the interest rate savings that a plan review could provide!

Consider the savings you could make by moving to a newer, lower-interest equity release plan if your old one was at 7%.

In Conclusion

Equity release plans can be a great way to provide for your needs in retirement.

But, it’s important that you review the terms of any equity release plan before signing on the dotted line.

If you’re considering an equity release plan as part of your long-term financial planning strategy,

Contact a financial advisor that can help you understand all the potential costs and benefits by running a free needs assessment on your home.

How Much Can You Release?

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Editorial Note: This content has been independently collected by the EveryInvestor advisor team and is offered on a non-advised basis. EveryInvestor 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.