Switch Deals Now Whilst Halcyon Times Exist For Equity Release Mortgages

Typically, older equity release mortgages can leave you steeped in high interest charges that are simply eroding the family’s estate. While some people will continue stressing with their month to month equity release charges, others will opt to make a change in their lives for the better by considering remortgaging their equity release scheme. To swap equity release schemes can ensure a better deal for many older equity release clients.

Understanding Your Choices
If you find that you are wasting money and time, or someone you know is wasting their time with an old equity release mortgage plan, you may want to advise them to look to swapping equity release schemes for their own good. Performing the switch to a new lifetime mortgage plan can be easy and quick, but will also relieve plenty of stress that you are now in a better position to save the equity in your property . And the time for switching to a new equity release scheme has never been better with interest rates being lower than they have ever been. Therefore, it is the perfect time to make the equity release switch.

You may be wondering how exactly one can switch from their old plan to a new equity release scheme. The process is incredibly simple and should not take too much of your time. Have you never owned a mortgage? Did you never remortgage and transfer your debt to a new lender. Well that is exactly what switching equity release schemes is all about. Call it an equity release remortgage.

All that is required of the individual is to get in contact with an independent equity release consultant. They will review your information; take down your existing plan details in order to complete a switch plan analysis. This will give you a definite decision as to whether or not you should swap equity release schemes by comparing your old, to new plan. Ensuring that all set up costs are accounted for and any early repayment charges included within the calculation, the adviser can then roll out the news.

What benefits can come by switching equity release schemes?
One of the major benefits of switching lifetime mortgage plans is down to interest rates. Rates during the latter end of 2013 were the lowest that homeowners have seen in years; these incredibly lower rates you could save £1000′s over the long term. Another benefit of choosing this type of plan is the greater flexibility now available whereby you have the option of applying for drawdown equity release schemes with absolutely no problem. The last benefit is that the startup fees for modern day equity release plans are much lower due to the inclusion of special offers such as cash backs and free valuations.

Now, a year later interest rates are starting to edge back up slightly, but this does not take away from the benefit of swapping out your current equity release. Instead, now is still the time to ensure that you are able to change your mortgage for the better. Remember, these equity release interest rates are fixed for life, so if there is a chance, grab yourself one of the best equity release deals around which could very well be the Aviva Flexible Lifetime Mortgage Plan with rates currently as low as 5.68%. (5.88% representative APR).

There are some disadvantages to the situation too, which you need to be aware of.

Cons of Swapping your Equity Release Scheme
Like swapping any mortgage, you will have certain fees associated with the switch. You definitely need to speak with a representative of an equity release company to determine if switching to a lower interest rate is going to save you a great deal based on the fees. The good news is in most instances you will be able to save a great deal; however, not everyone is alike especially given the length of time you might have carried your equity release plan.

• Check with a lifetime mortgage adviser, who should be qualified & experienced in such matters of switching plans & possible even worked for these legacy companies.
• Overview your current case and the amount of interest that you have earned so far in the build-up of your compounding interest. A redemption statement would evidence this data
• Check to see what types of interest rates are currently on offer –usually equity release comparison websites can provide these rates & details for you
• Decide if your home value has increased or decreased. You can usually gauge valuation from websites such as Zoopla where recent sales may have been listed.

Along with interest rates becoming lower there are many areas in the United Kingdom that have suffered housing devaluation. You may currently sit in a negative equity situation, which could hinder your ability to swap mortgages. If you are lucky and your home has increased in value dropping the interest rate is a perfect opportunity to ensure inheritance for your family.

Always remember to speak with your family and consider your options. With interest-only lifetime mortgages on the market, you could swap out of your older plan and start paying a little interest to help save your family’s inheritance. Assess your situation and what saving your family home means to you before you begin to renegotiate on any mortgage plan. Also find out if you have a great deal versus newer deals, as there are cases that do.

Looking to swap equity release schemes should be undertaken on a regular review basis, particularly for some of the older equity release plans from yesteryear. There are many legacy plans from companies who have now withdrawn from the equity release marketplace. Providers that were once very popular such as Northern Rock (now Papilio Equity Release), In Retirement Services (Sold their mortgage book to Newcastle Building Society & Just Retirement, Aviva with their Index-Linked Equity Release Plan or the Norwich Union Capital Access Plan should all be reviewed. Also, not forgetting Mortgage Express who had a maximum release lifetime mortgage along with the Portman, Saffron and Godiva (Coventry Building Society).

There are so many legacy equity release plans out there, and too many to list completely, but they are all still contactable to ascertain the latest redemption statements for your adviser following the completion of a Letter of Authority.. So to enjoy lower startup costs, fixed interest rates and the availability of drawdown plans, now is the time to decide on whether to swap equity release schemes and reap the benefits!

Are We Likely To Ever See Prudential Equity Release Plans Again?

In order to answer the question as to whether we will see Prudential equity release plans again we need to consider why equity release plans emerged in the first place and what they have to offer. Equity release allows you to raise funds from the value of your property. You and your spouse or partner retain the right to live at the property until you pass away or move out.

Essentially what you are doing is selling your home and then moving out later. For the retired over 55 individual or couple this can be a wonderful way to raise funds when they are needed. There are many reasons to choose equity release. The most obvious is that your retirement plan simply has not lasted as long as you thought or hoped it would. With the cost of living at an all-time high this is very common.

But, of course, you could just want to make your retirement a bit more relaxed. Or, perhaps you have always wanted to take an overseas trip and you have decided that this is the time.

Not all equity release schemes have been taken off of the market. In fact you have at least three companies that are major equity release providers. When you lose one provider there are often two more coming along the way or at least two more products to make it on the market. Whether Prudential equity release plans appear again or not, you are not being left out in the cold for your retirement needs. Instead, you have plenty of choices that have replaced the one product that is gone from the market right now. Let’s take a look at those options versus dwelling on the loss of one particular company’s product.

Lifetime Mortgages for Retirees

Under the name lifetime mortgages you have four products on the market right now. These are:
• Drawdown
• Roll-up
• Interest Only
• Enhanced

To start, rollup is the mainstream equity release. It is the one which all other lifetime mortgages are designed around. They are made for the person unable to make a monthly payment on the loan and who desires a large lump sum of cash to live out their retirement. You will see interest accrue onto the principle lump sum you took out. This lump sum and the interest are paid back once you die or decide to move out of the house the product is covering. Typically, payment is made with the sale of the home as most retirees do not have enough cash to cover the amount without a sale. You must be 55 years of age to take out one of these rollup products or any lifetime mortgage.

Drawdown is a definite change to rollup because you receive a smaller lump sum initially and then you take out money as you need it. Interest only adds up on the funds you have withdrawn from the account. This saves you money in the long run.

Enhanced is a version of the rollup scheme in every aspect, except it is a specialised mortgage to offer more money in a lump sum. You receive even more than the rollup plan or drawdown mortgage because your life expectancy is compromised. It might sound cold to say that illness in which death is quicker than most retirees is an advantage. However, in this case it is your ill health that can get you more funds because the loan is expected to be repaid quicker.

Interest only works like a rollup mortgage except you pay a monthly interest amount for as long as the loan is unpaid. Some products allow you to choose the amount of interest and make it a hybrid with a roll up in which any unpaid interest is rolled up into the lifetime mortgage. Most expect you to pay the full interest as it accrues each year.

If you do not appreciate these equity release plans in your situation, then consider a different choice in home reversion. This is an absolute sale of your house, but at least you get funds without a mortgage and interest accruing. For some this is a better option than having the burden of debt when they pass away.

Whatever scenario applies to you, you can see that the need for equity release plans is only going to increase. With this in mind it does seem likely that we will see equity release plans again in the form of Prudential equity release or at least from another company with products just as great.