Switching your equity release plan to a new one can potentially save you money through improved interest rates and more flexible features, however you’ll need to consider the potential risks and benefits before you switch.
The equity release market is influenced by various factors such as interest rates, competition among lenders, and market trends. These conditions can significantly impact the decision to switch equity release plans, making it essential to seek specialist advice.
Our equity release specialists have explained below what you should consider before switching plans, in addition to any costs you may be subject to if you decide to switch equity release plans.
What is Equity Release?
Equity release is a financial product that allows homeowners aged 55 and over to release funds stored in their properties value through a lifetime mortgage or home reversion plan. It can be available as a tax-free lump sum or in a drawdown facility to access at a later date, which can be used to supplement retirement income, undertake home improvements, or gift to family.
Equity release can be particularly beneficial for those who are asset-rich but cash-poor, offering a way to enjoy the value of their home while still living in it.
Reasons to consider switching equity release plans
Switching to a more competitive equity release plan means that you could be able to;
- Take advantage of lower interest rates: New equity release plans are becoming available all the time, not only with competitive rates but some great additional benefits such as free valuations and zero cost application fees that can make switching easier than ever. If you took out a plan several years ago, there could be a better plan on the market for you which could save you thousands.
- Release more equity from your home: If you are looking to release more money from your existing plan, then this is the ideal time to scope out the market for a better deal. Be sure to seek advice from your equity release advisor to learn more about your options and for tailored, personal advice.
- Move home: If you are thinking of moving house with an existing equity release plan, then you can transfer your existing plan over to your new property, also known as porting. However, it is always advisable that you check to ensure that the current plan is what’s best for your personal situation, circumstances and new home.
- Save money with a lower interest rate: Depending on when you took out your equity release mortgage, you may find that the interest rate on your current plan is no longer as competitive as it once was. Swapping to an equity plan with a more competitive interest rate could potentially save you thousands of pounds every year.
- Make the most of the latest features: Not all equity release plans are created equally, and some plans offer flexible features and benefits that weren’t available with previous plans such as – the ability to make repayments, guaranteed inheritance and no early repayment charges.
Switching equity release plans could help you access new, flexible features that your existing plan doesn’t provide. These can include things such as inheritance protection, making voluntary repayments with no early repayment charges, downsizing protection, or enhanced plans that could give you access to more cash.
How Can You Switch Equity Release Providers?
If you are looking for a better interest rate on your current equity release plan, more flexible features or you’re looking to release more equity, then switching equity release plans could be exactly what you need.
At Bower Home Finance, our equity release specialists are on hand to help guide you, starting with an assessment of your current arrangement and establishing whether switching equity release providers would be viable.
We will then search the whole market and put forward to you a range of different equity release plans, factoring your individual circumstances and requirements and explain everything in detail to help you reach a decision on the best and most suitable plan for you.
Request a callback from an equity release specialist to discuss your options today.
Choosing a new equity release provider
When switching plans and choosing a new equity release provider, it’s important to evaluate current equity release market in addition to each providers terms, rates, and the flexibility of their plans in comparison to your existing equity release plan.
Our equity release specialists will start by comparing interest rates, fees, and any potential penalties for switching. When deciding which provider is right for you, our advisers will compare providers who offer competitive rates and low fees, as well as plans that align with your financial goals to help find you the best option for your circumstances.
At Bower Home Finance, as proud members of the equity release council, we will only recommend switching equity release plans if it is right for you and the plan is provided by members of the Equity Release Council that adhere to strict standards and practices designed to promote the highest standards in the industry.
Seeking advice from an independent financial advisor who is registered with the equity release council can help you navigate the options and make an informed decision that best suits your needs.
Get started today by requesting a callback from one of our equity release specialists or find out how much equity you could release from your home with our free online equity release calculator.
Things to consider before you switch
As with any big financial decisions, there are often benefits, drawbacks and costs that need to be properly considered and looked into before signing anything and this is also true when switching equity release schemes.
If you’re looking to switch equity release schemes, seeking advice from an independent equity release adviser can help you decide which equity release products are right for you and if you will benefit from moving away from your current lifetime mortgage or home reversion plan.
Early repayment charges
A great number of the older plans weren’t designed to be repaid early and so tend to have early repayment charges (ERCs) so your advisor will need to consider this and factor it in to work out if switching is worthwhile for you.
Set up fees
Setting up a new plan will usually incur costs, the amount of which will vary depending upon the plan you want to move to. This can include advice fees, legal fees, valuation fees and arrangement fees, however these costs will vary between lenders and equity release plans.
For a breakdown of the cost of equity release, it is important to speak to a qualified equity release adviser. Read more about the cost of equity release.
Comparing interest rates
If you are looking to switch equity release plans, you will need to consider if switching will provide you with a better interest rate or a better overall plan for your circumstances.
Your equity release adviser will discuss in detail your circumstances and if switching equity release plans will be beneficial for you.
Get started today by comparing the current equity release interest rates across the market, or take a look at our free and easy to use equity release calculator and find out all about equity release and how much tax-free cash you could potentially access from the value in your home.
Eligibility and Switching Frequency
Eligibility for switching equity release plans largely depends on the terms of your existing loan and your personal circumstances.
Factors such as your age, health, and the value of your property play a crucial role in determining whether you can switch to a new plan. Some equity release providers may have restrictions on how often you can switch plans, while others might offer more flexibility.
It’s essential to review your equity release plan with a qualified equity release adviser to ensure it continues to meet your needs. Changes in your financial situation, health, or property value could make switching to a new plan beneficial.
Consulting with an independent equity release advisor can help you understand your eligibility and the best timing to switch your equity release plan.
Find out how much equity you could release with our free online equity release calculator:
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FAQ’s
Is equity release transferable?
Yes, a Lifetime Mortgage Equity Release plan may be transferable to another property subject to the providers criteria, however you may be better off to repay the old mortgage and take a new one out.
Bower Home Finance offers whole of market lifetime mortgage advice and can advise if this is the best option for you. For example, a new plan may allow you access to more money, a lower interest rate, or new features that your existing plan does not provide.
Can I transfer my equity release plan to a new provider?
Yes, you can choose a new lifetime mortgage plan via an alternative provider if you and your adviser feels there will be advantages that you do not get with your existing plan, as mentioned above.
You may be able to shop around different lenders to see whether there are any better deals on the market, or a plan that suits a change in circumstances that occurred since you started your original plan. This may include making over payments on your plan or having more flexibility with a plan.
Are there any drawbacks to changing your equity release provider?
Whilst switching equity release providers can come with several benefits including being able to release additional funds in some cases, moving away from your current plan can come with some drawbacks including the potential costs of switching to a new provider.
The one major drawback switching providers is that you may be subject to an early repayment charge in order to get out of your existing plan. These repayment charges can be significant, depending on the type of plan you have and how long you have had it. You may be free of early repayment charges is one person has passed away or gone into care in the last few years, please contact our team to see if this applies to you.
Another downside is that switching plans is not free and you will need to pay for equity release adviser fees and solicitor fees to move over.
Can you get out of equity release?
If you have a Lifetime Mortgage, which is the most popular type of Equity Release plan, you may be able to make overpayments depending on the plan if you want to cut down the amount of compound interest that will be payable after you pass away.
If you wish to make payments towards your plan or clear the plan entirely, you will need to seek advice from an equity release adviser to understand if this is an option.
Can I change my equity release plan?
Yes, you can switch a lifetime mortgage equity release plan if you wish to try and secure a better deal in terms of lower interest rates or gaining additional benefits. It differs from porting your mortgage or plan, which happens if you decide to move home and want to transfer your mortgage or Equity Release plan to the new property.
Switching equity release plans require independent financial advice from qualified equity release advisers who can evaluate your existing equity release plan and help you decide if switching plans is right for your circumstances.
At Bower, we will understand your unique circumstances and advise you to ensure you are receiving the best plan to meet your objectives. There are plans that allow you to make voluntary repayments and move home, subject to lender criteria. However, early repayment charges may apply in certain circumstances.
Equity release requires paying off any existing mortgage. Any money released, plus accrued interest to be repaid upon death, or moving into long-term care. Equity release will reduce the value of your estate and your entitlement to means-tested benefits now or in the future, and impact long-term care funding.
Bower Home Finance provides independent, impartial whole of market advice with an award-winning customer service experience. Initial advice is provided at no cost to you and without obligation. Only if you choose to proceed and your plan completes, would a typical advice and administration fee of £1,695 be payable.
If you are considering equity release, we strongly recommend that you read our equity release page carefully and talk to one of our specialists before deciding if you wish to proceed.
To find out more about any of the products and the service we provide, please call us on freephone 0800 411 8668, request a call back, email us, or join our live chat you’ll find on our website.
Please be aware that equity release may involve a home reversion plan or lifetime mortgage which is secured against your property. All features and risks are thoroughly explained in your free personalised illustration.
