Equity Release Re-mortgage
If you took out an equity release plan even a few years ago, you may have a scheme, which has a considerably higher fixed rate than is currently available. This is because with increased demand and competition between lenders rates have fallen to the extent that as at June 2009 fixed rates could be obtained from as little as 5.92% flat (the overall cost for comparison is 6.2%APR): Source Stonehaven.
If so you or your beneficiaries may be unwittingly losing more equity in your home than necessary.
NB: The Early Repayment Charge if you were to voluntarily repay this loan early (i.e not because of death or long term care for the sole applicant / or last applicant in the case of joint plans) will:
- Never be greater than 25% of the advance.
- Apply for 21 years in this case
What can I do about it?
Well just like you may have done in the past with your ordinary mortgage, simply by considering switching the balance on your current out of date scheme, to a more up to date new one you may be able to: -
Considerably reduce the amount of interest which may have accumulated by the time your plan finally finishes as the following table aims to demonstrate; -
| Amount currently owed - £65,000 | |||
| Years to plan end | Amount which would be owed at say 7.5% £ |
Amount owed at 5.92% £ |
Amount saved £ |
| 5 | 93,315 | 88,200 | 5,115 |
| 10 | 133,967 | 118,496 | 15,471 |
| 15 | 192,327 | 159,199 | 33,128 |
Please note: 5.92% rate is lowest available as at 24/06/2009 (Source Stonehaven), but whilst rates are fixed for life once taken, rates available will vary over time and savings made may be higher or lower than those shown. Note - This rate may not be available to everyone.
This is a Lifetime mortgage. To understand the features and risks ask for a personalised illustration.
Inevitably such re-mortgaging will incur you in some new costs including some if not all of the following: -
- New Valuation fee.
- Legal fees.
- Our Advice fee. - Please see our Initial Disclosure Document
- New lenders Arrangement Fees.
- Possible Early Repayment Charges to come out of your existing scheme.
- Deeds Release Fees and Admin fee charged by your current lender to finalise your existing deal.
Which will reduce some of the savings made. That's why before recommending any switch we would fully investigate the savings to be made and give you a full re-mortgage analysis for you to consider. Nevertheless should you have no reason to believe that any new plan arranged would end prematurely, considerable savings could be made.
Get more money -even if your existing lender has been unable to help you, as some new lenders are willing to lend a higher percentage of your home than some older schemes. Please note we strongly suggest that you do not take further money unless necessary, as this will only leave less money to look after yourself later in life, or leave to beneficiaries.
If you would like to investigate re-mortgaging your existing equity release plan, please complete our dedicated re-mortgage enquiry form and we will call you back as soon as possible.
"Equity release" includes home reversion plans and lifetime mortgages. To understand the features and risks ask for a personalised illustration.
