Swap your equity release plan

Over the past few years lifetime mortgages have become highly popular which has encouraged more providers to enter the equity release market. This has produced some fierce competition which, along with low Bank of England interest rates, has pushed interest rates on lifetime mortgages down considerably. It is vital not to get caught out by fluctuating interest rates, and you should never underestimate the effect an increase or decrease just 1% can have on your equity release plan. Interest rates dropped by almost 1% in 2005, but they have risen since. However there are still some great deals available for lifetime mortgages and rates are much lower than they used to be, so if you released cash from your home with an equity release plan over 5 years ago, now is the time to take advantage of these lower rates.

Change to a more competitive equity release plan

By swapping to a more competitive equity release plan, you could considerably reduce the amount of interest that accumulates in the future. The table below illustrates the difference in lifetime mortgage interest rates from 6 years ago, when rates were around 8%, to the lower interest rates available today.

Amount borrowed	Lifetime Mortgage interest rate	Total amount owing after
		5 years	10 years	15 years
£70,000	8.20%	£103,809	£153,947	£228,301
£70,000	5.99%	£93,632	£125,241	£167,522
	Save by switching	£10,177	£28,706	£60,779

Even if your plan has early repayment charges, changing to an equity release plan with a lower interest rate could prove more beneficial than sticking with your current equity release plan. We can find out whether it would be wise for you to switch your lifetime mortgage by working out how much it would cost. We calculate this by comparing:

Interest charges V (early repayment charge + all associated costs or fees for new equity release plan)

If the interest charges work out to be higher than the early repayment charges and other fees, your independent financial adviser from Key Retirement Solutions will search the whole equity release market to find the most competitive lifetime mortgage on your behalf, and depending on the plan you choose, could even help you to release more equity from your home to spend as you wish.

Click here to ask one of our independent advisers to contact you about switching your equity release plan or call us free on 0800 531 6027.

This is an equity release plan. To understand the features and risks ask for a personalised illustration.