Is equity release right for you?
Speak to the experts at HUB Financial Solutions, they'll be able to help
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Yes, if you have a lifetime mortgage you have the option to move to another provider, or to stick with the same provider but move to a different scheme.
Lifetime mortgages are the most popular type of equity release. They allow you to borrow some of your home's value and the loan is then repaid when you sell the property, die or go into care.
Home reversion plans are another type of equity release, and involve you selling part or all of your property to the home reversion provider. When the property is sold, the proceeds are divided based on the percentage you own and the percentage that your provider owns.
If you have a home reversion plan, you don't have the option to switch.
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Speak to the experts at HUB Financial Solutions, they'll be able to help
Go to HUB Financial SolutionsIn theory, switching your lifetime mortgage could help you to benefit from lower interest charges, which could save you thousands of pounds over the long term.
There are hundreds of equity release products on the market, so it can pay to shop around.
But with interest rates having risen sharply in the past couple of years, you might struggle to find a cheaper alternative to the deal you already have, unless you took out your plan many years ago when lifetime mortgage rates were even higher.
Another potential benefit of switching is that you could release more cash from your home if your property has increased in value since you took out your lifetime mortgage.
Switching lifetime mortgage will also allow you to change the terms of your deal. For example, you might want a plan that allows you to pay off a proportion of the loan each year without a penalty charge, or one that ring-fences part of the value of your home to guarantee an inheritance for loved ones.
Possibly, as some plans come with early repayment charges. These can be 'fixed' or 'variable.'
Fixed early repayment charges are typically applied on a sliding scale - for example, they might start at 10% of the value of the loan in year one, reducing to 5% after you've had the loan for five years, and so on.
Variable charges can be higher - though they are typically capped at a maximum of 25% of the amount borrowed.
The amount you're charged is linked to the value of government bonds, known as 'gilts' - specifically the movement in gilt yields between the date you took out the lifetime mortgage, and the date of early repayment. If gilt yields have risen in that time, you won't face an early repayment charge.
Because of early repayment charges, it might take you several years before switching to a cheaper deal will start to pay off.
Find out if equity release is right for you by speaking to the experts at HUB Financial Solutions.
As well as considering any early repayment charges, you'll need to check how much you still owe, and what your current interest rate is.
Then you'll need to factor in the cost of taking out a new plan. Here are some of the typical upfront fees you could face:
Switching a lifetime mortgage will require you to take regulated financial advice - it’s no different to taking out a plan in the first place (even if you’re staying with the same lender).
Your adviser will do much of the legwork for you, such as sending your application form to the new lender. Funds will be eventually released to your solicitor in order to pay off your old lifetime mortgage.
Speak to the experts at HUB Financial Solutions, they'll be able to help
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