Why Should You Consider Reviewing Your Equity Release Plan in 2024?

Are You Considering Reviewing Your Equity Release Plan? Find Out When to Review Your Plan and the Advantages of Doing So. Read On to Find Out More.
  • Last Updated: 06 Feb 2024
  • Fact Checked
  • Our team recently fact checked this article for accuracy. However, things do change, so please do your own research.

Contributors:

Francis Hui

Key Takeaways

  • The best way to review your equity release plan is by regularly examining your financial needs and goals, and considering if your current plan meets them effectively.
  • Regularly reviewing your plan is crucial to ensure it continues to meet your evolving financial needs and circumstances.
  • Review your plan at least once a year, or whenever significant changes to your financial situation occur.
  • Significant changes such as a major life event, financial hardship, or changes in property value may require a review of your plan.
  • Not reviewing your equity release plan can lead to missed opportunities for better rates or terms and may not align with your changing financial needs or circumstances.

If you've chosen a lifetime mortgage in the UK, you may soon find yourself considering reviewing your equity release plan.

You may be wondering whether periodic reviews are necessary, and the answer’s a resounding yes! You should review your plan regularly to make sure it still meets your needs and circumstances.

According to the Equity Release Council, the total amount borrowed through equity release in 2022 was £6,2 billion, up by 29% from 2021 and by 102% from 2017.1

This indicates that equity release is gaining popularity among homeowners over the age of 55 who want to access some of the value in their property without having to sell their homes.

In This Article, You Will Discover:

    In this article, the Every Investor team will explore the intricacies of reviewing your equity release plan and whether switching equity release providers is something you should consider. Our goal is to provide a comprehensive overview of the process, so your are in a position to make more informed decisions. 

    At Every Investor, we prioritise accuracy and comprehensiveness, investing significant time and effort into analysing the latest equity release news. Our dedicated team ensures that all our content undergoes extensive quality checks so it remains current and relevant.

    Let's discuss the importance of reviewing your equity release plan.

    What Is the Best Way to Review Your Equity Release Plan?

    Regular assessments of your equity release plan are essential for maximizing the benefits from the increased value of your home and adapting to any financial changes.

    It's advisable to consult with a financial advisor who possesses deep knowledge of equity release schemes for personalized guidance.

    Such expertise can help navigate the complexities of equity release, ensuring your plan remains optimal for your circumstances.

    It's wise to review your equity release plan annually or upon any significant shift in your financial situation.

    Paying attention to interest rates is crucial, as a decrease could signal an opportune moment to switch to a lifetime mortgage with more favourable terms.

    Understanding any fees or penalties linked to modifications in your plan is also important. The goal is to manage your equity release not just effectively, but wisely, considering the full scope of your financial landscape.

    Why Should I Review My Equity Release Plan?

    You should review your equity release plan as doing so may enable you to identify better opportunities. 

    However, it's important to be aware that changes in the market or your financial situation could also mean more favourable terms aren’t available to you.

    Reviewing your equity release plan could be a way to help ensure your financial strategy aligns with your changing needs.

    Why?

    Changes to interest rates, your health or financial situation, and your home’s value—and fluctuations in the equity release market—can all have a profound impact on the suitability of your current plan.

    You should review your equity release plan if:

    • Your situation has changed
    • Your property has increased or decreased in value 
    • Your equity release product has become outdated or unsuitable for your needs 
    • Your equity release provider has changed its terms and conditions since you took out the plan

    Reviewing your equity release plan regularly may help it continue to match your goals and expectations, and ensure that you’re getting the best deal possible. 

    With the help of a qualified equity release advisor or broker, you can explore other options on the market that may be more suitable or beneficial for you.

    How Do I Review My Equity Release Plan?

    You can review your equity release plan by consulting a qualified equity release advisor or broker and analysing your existing plan. 

    With their assistance, you can:

    • Check your current balance and interest rate
    • Compare your current plan with other plans on the market
    • Understand the pros and cons of each option and find the most suitable plan for you
    • Review any significant change in your personal situation or property value

    As the market changes, advisors will be in the know about any new plans and features that may better suit your needs and goals. 

    What Are the Advantages of Reviewing Your Equity Release Plan?

    The advantages of reviewing your equity release plan include the possibility that doing so may help you maintain control over your financial situation. 

    Keep in mind, however, that any changes to your plan can also bring risks and unforeseen consequences.

    Reviewing your equity release plan can offer you several advantages:

    • A review could reveal options with more competitive interest rates, flexible plans, or new types of equity release products that better suit your needs. You can save money by switching to a lower interest rate or reducing your charges.
    • You can access more money by releasing more equity from your home (if there’s more equity available) or increasing your loan-to-value ratio. 
    • You can improve your flexibility by choosing a more suitable product or feature for your needs.
    • You can protect yourself from future changes by locking in a favourable interest rate or term for your loan.

    Reviewing your product is all about keeping your plan relevant and efficient, but remember that moving to a new equity release plan may have negative consequences.

    Speak to an equity release broker or advisor to find out what your best course of action is.

    What Are the Downsides to Reviewing Your Equity Release Plan?

    The downsides to reviewing your equity release plan can primarily be broken down into three categories: cost, time, and complexity.

    Let’s take a closer look at these potential disadvantages:

    • Cost: Some equity release plans may carry fees for reviewing or modifying the terms of the plan. This can include administrative fees, legal fees, and in some cases, Early Repayment Charges if you decide to switch providers or pay back more of your loan. 
    • Time: Reviewing your equity release plan isn’t a quick process. It requires a thorough understanding of the terms of your current plan, a careful analysis of your current financial situation, and potentially the process of seeking and consulting with a professional financial advisor. 
    • Complexity: Equity release plans are complex financial products. Understanding the terms of your plan, how it impacts your estate, and the long-term implications can be challenging, particularly for people without a financial background. Additionally, the market for these products is always changing, with new plans and providers entering and leaving the market. 

    While reviewing your equity release plan from time to time can have its benefits, it's essential to be aware of these potential downsides and carefully consider them before deciding to embark on a review.

    What Are the Risks of Not Reviewing Your Equity Release Plan?

    The risks of not reviewing your equity release plan could include missing out on lower interest rates or better-suited plans.

    Additionally, your original plan may no longer be suitable if your circumstances have significantly changed. 

    Not reviewing your equity release plan can expose you to several risks:

    • You may be paying more than you need to by sticking to a high-interest rate or paying unnecessary charges. 
    • You may be missing out on better deals or opportunities by ignoring other providers or products that may offer better features.
    • You may be stuck with an unsuitable or outdated product or feature that doesn’t meet your needs or expectations. 
    • You may be vulnerable to future changes by not locking in a favourable interest rate or term for your loan. 

    Be sure to review your plan with the help of a qualified equity release advisor to avoid putting your financial health and future security at risk. 

    How Might Today’s Equity Release Market Affect My Plan?

    Today's equity release market may affect your plan by being more competitive and consumer-focused than in previous years. 

    The market’s grown significantly in recent years,2 and more and more homeowners over the age of 55 are looking for ways to access some of the value in their property without having to sell it.3

    The main drivers behind this growth are:

    • The ageing population and increasing life expectancy,4 create a higher demand for cash in later life.
    • Until recently, rising property values,5 which created more equity and borrowing potential for homeowners. (Note that in 2023, however, the UK saw the fastest annual drop in house prices since 2011.)6
    • Changing attitudes toward later-life lending.7
    • Innovation (in the form of features such as downsizing protection)8 and competition in the equity release market, providing consumers with more options.9

    Consider potential savings by exploring newer, lower-interest equity release plans.

    Remember, however, that the market's complexity calls for careful navigation and well-informed decision-making.

    How do I get a lower rate? 

    The rates you may be offered on an equity release plan will depend on how much you’d like to borrow and whether you qualify for an Enhanced plan. 

    How does that work?

    The smaller your loan, the lower your interest rate will generally be. 

    Furthermore, you may be offered a lower interest rate on your equity release plan if you suffer from particular health conditions. 

    While increased regulation has made the market safer and more reliable, keep in mind that even with regulations in place, no financial decision is entirely without risk.

    Common Questions

    How Often Should I Review My Equity Release Plan?

    Can I Review My Equity Release Plan If I’ve Already Released All the Funds?

    Is It Possible to Switch Equity Release Providers During a Review?

    Are There Any Fees Associated With Reviewing an Equity Release Plan?

    How Many Times Can I Get Equity Release?

    What Is the Best Way to Review Your Equity Release Plan?

    Why Should You Regularly Review Your Equity Release Plan?

    How Often Should You Review Your Equity Release Plan?

    What Changes May Require a Review of Your Equity Release Plan?

    What Are the Consequences of Not Reviewing Your Equity Release Plan?

    In Conclusion

    Reviewing your equity release plan is an important step that ensures your plan still suits your needs and circumstances, and that you’re getting the best deal possible. 

    By reviewing your plan regularly, you could potentially take advantage of lower interest rates, access more money, improve your flexibility, or protect yourself from future changes. 

    However, reviewing your plan may also involve some costs and risks, such as paying Early Repayment Charges, valuation fees, legal fees, and advice fees. 

    You should always seek advice from a qualified and independent financial advisor who specialises in equity release when reviewing your equity release plan.

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