Can switching Equity Release providers save you money?

Can you save money by switching Equity Release providers?

Did you know that you can switch your Equity Release provider if you have had your plan for at least 12 months? Whether it will save you money depends on a number of things though. You might even be thinking of switching for reasons other than saving money. So where do you start?

There are a number of reasons why you may want to think about switching Equity Release providers. The most obvious one being that you are looking to raise further cash. You may even find yourself in the situation where you now have moved into an age bracket that will enable you to take a bigger percentage of the value of your property which, in all likelihood has also increased in value.

The first two things you must do if you are thinking of switching providers is to find out what the current balance on your account is and whether you are still in a penalty period if you switch.

Finding out how much you can take from your property is fairly straightforward. It depends on the property value and the age of the youngest applicant. You can use this handy calculator from South West Equity Release to find out how much you can take. Once you know that you can then take away the outstanding balance from your existing plan, including any penalties, and the amount left is the amount you can take.

There are a number of other things to take into account though. If the interest you are going to be charged from a new provider is lower than the one you are currently paying then that makes the choice on whether to switch a lot easier. If the interest rate is going to be higher though, then you need to weigh up whether the benefit of having additional money to use as you wish is worth the extra interest you will have to pay for it.

Don’t forget, the new interest rate will now apply to the whole amount of the loan if you switch providers.

The way interest is rolled up on a typical Equity Release Plan means that even a modest reduction in the interest rate can have a significant effect on reducing the final amount that has to be repaid.

If you have had your plan for some years then you might find that newer plans might have greater flexibility in the options available to you. You may have wanted to originally have a plan where you could make some repayments, or wanted to include some form of guarantee with regard to the amount you could leave your family. Such options may have not been available to you then, but are now. Taking a careful review of your existing plan, you may find what is available to you now could be your way forward.

Finding out whether or not transferring your existing plan to a new provider is worthwhile is simple and free. Just complete the enquiry form here and we will arrange for an independent equity release specialist to give you an honest answer about what you should do.