We’ve all been there:
It’s natural to want to know that you’re making the best decisions for your future. However, when it comes to your finances, these choices can be complicated. Several factors go into good planning, and one of them is the equity release scheme.
What’s Equity Release?
Equity release is a type of home mortgage that allows homeowners to unlock the equity in their property.
Equity release scheme is available from several companies, and there’s often more than one type for you to choose from.
These types include fixed-rate plans, where the monthly payments will stay the same throughout your lifetime; capped rate plans, which adjust in line with interest rates over time; and market-linked plans that offer equity release based on what is happening with property values at any given moment.
Suppose you’ve reached a stage in your life where living independently just isn’t possible anymore. In that case, an equity release plan could be the answer to your prayers – but it won’t solve all of your problems by itself.
So before taking out one of these types of mortgages, make sure that you consider everything carefully and weigh up the pros and cons for yourself.
When to Switch Your Equity Release Lifetime Plan?
If your life plan was set up in the 1990s, you might want to consider switching plans.
The mortgage rate at that time would have been 11-12% per year, and interest rates are now very much lower, so a switch from fixed to capped could mean an increase of £400 each month.
On the other hand,
If you’ve chosen one with a high monthly payment but low capital repayments, such as one where you’ve paid off the capital within 20 years, then you might want to reconsider.
And suppose it turns out that your situation is more complicated than usual and you don’t feel confident in deciding on your own, speak to an independent financial adviser who can help guide you through the switching process.
In that case, they could even go with you for face-to-face negotiations, so everything goes smoothly.
Do I feel confident in making decisions about future changes to my mortgage myself, or would I benefit from speaking to an Independent Financial Adviser before proceeding with any decision-making process?
For many people, their home may be now worth less than what they owe. While equity release lenders may not agree with you changing your existing deal, there might be other options. If you’re considering releasing more money through a new Equity Release Plan, then make sure you understand against your home.
Calculate Your Way Towards A Better Plan
This is a major factor as you may not be able to release more payments if the value of your house has gone down. It’s best to speak with an Independent Financial Adviser in this situation who will advise you on what might work for you and your borrowing limit.
It can be useful to look at how many years it would take and the overall cost before deciding which one is right for you. For example, releasing £50 per month from age 60-65 means that by the time they’re 65, their mortgage could be repaid completely.
Benefits of Switching to an Alternative Equity Release Plan
The benefit of switching to an alternative Equity Release Plan is that you may have more control over your finances.
This will help with any particular financial plan that could suit your needs instead of being limited by the parameters set out for a traditional mortgage product.
You’ll also feel in charge financially and not reliant on others or the bank’s approval as this releases payments from other sources rather than just against the equity in your home. In addition, this means there are no restrictions around how much money comes into the house each month, making budgeting easier.
Top Lifetime Mortgage Providers
- NatWest Mortgages
- Santander Lifetime Mortgage
- Nationwide Building Society
- RBS Mortgages
- Lloyds Bank Home Loans Lifetime Mortgage
When you want to switch your equity release plan, these are the top providers. You should check them out for more information.
Keep in mind:
Switching equity release plans is a big decision. There are many factors to consider before deciding what plan you want for your retirement or later life.
For example, the type of mortgage arrangement that’s available, as well as how much you’re willing to spend on fixing up your home, will all be different depending on which provider you choose.
Requirements When Changing Equity Release Plans
- Proof of identity
- Evidence that you’re the owner or mortgagor
- A copy of a recent gas, electricity and water bill in your name at home (if applicable)
- Your national insurance number
If you are looking to switch equity release plans, there are some requirements before choosing this option. With these things in mind, read on for more information about how switching equity release plans can be easier.
Why Switch Your Equity Release Plan?
Some people are finding it difficult to make their mortgage repayments and want a new plan. If you’re in this situation, switching plans may be the way forward for you.
Can You Get a Second Equity Release?
It is possible to get a second equity release. Still, you may not be eligible for one if you already have an existing plan.
Why Look For a Different Equity Release Mortgage Deal?
Some people are looking for a more flexible deal; others want to buy a house but cannot afford the large deposit. A different equity release mortgage may help you in these situations and give you an affordable way of buying your own home.
How Can You Switch Equity Release Providers?
If you want to switch equity release providers, you must find out about the charges of each provider.
It’s also a good idea to compare terms such as maximum repayments, average rates and the length of term before deciding which mortgage deal suits your needs best.
In simpler terms:
Switching to a new equity release plan could be the best decision you make for your future financial stability.
However, we recommend talking with an advisor and comparing plans side-by-side before making any decisions so that you can feel confident in what’s best for your situation, especially if it includes having to rely on long-term care later down the line.