How you could save more than £50,000 by changing your stock release plan

OLDER homeowners could save thousands of pounds by exploring whether they could switch to a better equity release deal.

A growing number of people are using equity freeing to free up the money they have in their home.


Anyone over the age of 55 may be able to access the equity release

Equity Release is available to those aged 55 and over and gives you access to cash held over the value of your property.

It’s like a mortgage because it’s a loan that’s secured with your home. But the main difference is that you don’t have to make monthly repayments.

Instead, interest on the loan is rolled up and paid out either when you move into foster care or when you die.

Borrowers can borrow as little as £10,000, but depending on how much your home is worth and which plan you choose, you could get significantly more – up to 58% of your property’s value.

The money is also tax-free, so you don’t have to worry about an invoice from HMRC.

As real estate prices rise and people live longer in retirement, freeing up equity is becoming more popular.

According to the Equity Release Council, more than 23,000 homeowners completed an equity release plan in the first three months of the year.

These borrowers borrowed an average of £94,000 from their home.

But even if you already have a stock free plan, you can save tens of thousands of pounds.

Interest rates have come down in recent years, which means you could save money by switching to a different business.

You may also find a more flexible plan that better suits your needs.

Here’s what you need to know.

Click here to find out if switching your existing plan could save you money.

As with standard mortgages, you can convert your equity release loan into a better deal.

Age Partnership, Britain’s largest equity release broker, said homeowners who switched last year each saved an average of £51,211 over the life of their loan.

To switch, you must have had your existing plan for at least 12 months.

It’s worth asking a broker to check to see if you’re eligible – they’re often free and could result in huge savings.

This is all the more important as millions of households grapple with a cost of living crisis and grapple with soaring bills.

Retirees in particular may find that their retirement income isn’t what it used to be.

Click here to request a no-obligation review of your plan

What you need to know about switching your stock release plan

Interest rates are rising, and that could mean homeowners should act soon to secure the best deals.

Andrew Morris, Senior Equity Release Advisor at Age Partnership, said: “Anyone thinking about changing their old plan should act now and get their free review to stay ahead of the rate hike.”

In 2016, the average interest rate for equity release plans was 6.15%.

Today they are much lower at 4.33%.

But since the Bank of England has raised interest rates, mortgage rates will also rise.

Morris said, “Equity release plans are also a lot more flexible than in previous years, so the added benefit for anyone considering switching is that they have a lot more control over the loan than they used to.”

Flexible share release options

Along with cheaper deals, equity release borrowers have far more options than they used to.

According to Moneyfacts, 665 different share release plans are now available, compared to just 66 in 2016.

Plans that meet the standards set by the trade association Equity Release Council must now allow for voluntary repayments, which can help keep your debt from growing.

Some deals also now allow borrowers to withdraw their money in parts instead of taking the full amount at once.

This can save you money since you only pay interest on the cash you accessed.

And you now have the option to move home and take the loan with you depending on the terms set by the lender.

Is Switching Stock Give-Up Plans Right for Everyone?

It can be helpful to speak to an expert when considering an equity release


It can be helpful to speak to an expert when considering an equity release

Whether or not changing your plan is right for you depends on your circumstances.

But it might be worth keeping an eye on the market in case better deals hit the market.

Age Partnership said one of the reasons people often can’t change their plan is because the loan-to-value (LTV) ratio is too high.

Another factor to consider is prepayment penalties (ERC) on the original loan.

Some plans charge an ERC or exit fee when you exit your current deal and switch to a new one.

If these are high, it could outweigh the benefits of switching, especially if you haven’t had the loan long.

Talking to an expert can help. A specialist stock issuance advisor can review the cost of your current plan and compare it to new rates to determine if it’s worth switching.

How do you switch your share release plan?

Brokers like Age Partnership offer free assessments so you can find out if a change of plan is an option.

Request a no-obligation review of your existing equity release plan.

When choosing an advisor, make sure they can recommend plans from a range of lenders (some may be tied to just one company).

This ensures that you are recommended the best plan for your unique needs.

For example, they look at whether you qualify for the latest plan developments, the amount you owe on your stock delivery plan, including any accrued interest, and any early repayment (ERC)/exit fees on the original loan.

The advisor will explain to you that the lifetime mortgage is secured with your home and that the loan plus interest will be repaid if you die or move into long-term care.

As part of the free review, they should give you a personalized illustration to explain all the features as well as the risks involved.

What are the risks?

Freeing up equity comes with risks, and it’s important to consider them before committing to a plan.

For example, the money you get from releasing equity increases your income, which can affect your eligibility for benefits like retirement credit.

Also remember that if you are placed in foster care or die, the debt will need to be paid off, which could mean selling the family home.

Some plans allow you to keep a portion of the proceeds from the sale of the property for an inheritance.

It is important to let your loved ones know about your plans to avoid arguments.

Borrowers must seek advice from a regulated equity clearance advisor before entering into any product to ensure they understand all the risks – as well as the benefits.

Age Partnership’s Equity Release Calculator is a good place to start. It can help you figure out how much money you can access and put you in touch with an advisor to learn more.

Age Partnership offers a free and non-binding initial consultation. So you only pay one fee – which is normally £1,795 – if you continue.

Click here to find out if switching your existing plan could save you money.

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