By Tom Philips at July 25, 2024

Can You Switch Equity Release Plans in 2024/2025?

Yes, you are able to switch equity release plans in 2024 and in 2025 and doing so could mean that you benefit in a number of different ways.

Many people take out an equity release plan and deplete their funds, especially if it’s been a number of years or decades since you first originally took out an equity release loan.

Therefore, many people look at switching heir equity release plans later in life for better deals and more funds [1].

As always, switching your equity release plan is possible, depending on a number of different factors.

For example, whether or not you can switch your equity release plan will depend on your lender’s terms and conditions, whether or not your current plan includes any early repayment charges and whether or not your home has creased in value.

There are many reasons why someone might choose to switch their equity release plans in 2024 or in 2025.

Firstly, by doing so you might benefit from lower interest rates, a range of new products or new and more flexible terms and conditions.

Lenders are forever changing their offerings, so you might find that there are now better and more new and improved products on offer and available to you [1].

If you are interested in switching your equity release plan in either 2024 or 2025, then make sure you speak to your equity release adviser or specialist first before making any decisions.

You will need to check that you are suitable for your new plan, that your circumstances haven’t changed and that you would be accepted should you apply.

What to know before switching your equity release plan

There are a number of things that you should know and consider before taking out an equity release plan in 2024 or 2025.

For example, you will need to speak to your equity release adviser about the current interest rates on equity release loads, the flexibility of any new plans and the additional charges for switching plans [1].

It is incredibly important to sit down and speak to your adviser about the impact switching your equity release plan will have on your loved ones and next of kin.

For example, switching to another equity release plan for additional funds might mean that there won’t be any inheritance left for your loved ones once the house is sold and the loan is repaid.

It is always advised to speak to your loved ones and next of kin about your plans to take out another equity release loan before doing so, so that they are fully aware of your plans and understand the process.

You must remember that there is no guarantee that switching equity release plans is possible or for the best, although if you do qualify for a switch then you will benefit from all of the previous perks of your previous loan.

This will include things such as the no negative equity guarantee, downsizing protection and the fact that your lender should be a member of the equity release council.

How can you successfully switch your equity release plan?

Switching your equity release plan is usually a relatively straight forward process.

You are able to switch your equity release plan by talking to your equity release adviser who will be able to compare deals and interest rates.

You should never attempt to switch your equity release plan without the help and advice of an equity release adviser or specialist.

You might choose to switch equity release plans to either a new lender, or to stick with your own lender.

If you choose to switch lenders then you might end up having to pay an early repayment fee on your current equity release loan, which could end up being a significant amount.

Some of the lenders our advisors work with include:

Aviva
Halifax
Liverpool Victoria
Legal & General
Nationwide
Sun Life

Am I eligible to switch my equity release plan?

In order to find out if you are eligible to switch your equity release plan, then you will need to speak to your qualified equity release adviser.

Although you have once qualified for an equity release plan, there is no guarantee that you will qualify once again for a new plan, or be able to switch with your current lender.

Your adviser and lender will take into account a number of factors when considering you for an equity release switch. These factors include things such as your age, your health and the value of your property.

There are a number of reasons why someone might not be approved for an equity release plan switch, or why switching might not be the best option for them.

For example, some plans have restrictions attached to them, meaning that you are unable to switch plans. Other plans might have high early repayment plans, meaning that it is not wise to switch.

Likewise, age plays a huge role in whether or not you might be able to switch equity release plans. For example, older borrowers might be able to borrow more from their home.

As you should be older, this means that you might be able to borrow more money by switching plans.

In order to re-apply for an equity release plan, your property and home needs to meet the requirements of your new loan.

Although your home was once approved for an equity release loan, the value and condition of your home might have changed significantly since you first applied.

Your lender will take this into account when considering you for an equity release loan.

How Frequently Can You Change Your Equity Release Plan?

There are no specific limitations on how often you can switch yourequity release plan.

However, it’s crucial to carefully consider the costs and potential consequences of switching too frequently. Doing so may incur additional fees or charges, which could impact the overall value of your plan.

It’s advisable to consult with a financial expert who can assess your individual circumstances and provide guidance on the optimal timing and frequency for switching yourequity release plan.

While there are no restrictions on the number of times you can switch, it’s important to weigh the potential costs and consequences of frequent changes.

Seek expert advice to determine the most suitable timing and frequency for your specific situation.

Do I Require a Solicitor for Switching Equity Release Plans?

Yes, it is highly recommended to engage a solicitor when switching equity release plans. The Equity Release Council strongly advises this, as solicitors play a crucial role in ensuring a smooth and legally compliant process.

How Long Does it take to Switch Equity Release Plans?

The duration of the switching process can vary depending on several factors, including the complexity of the switch and the efficiency of the providers involved. Unexpected delays can occur, and factors such as property valuation and legal processes may influence the timeline.

What are the benefits of switching equity release plans?

There are a number of benefits associated with switching your equity release plan.

For example, by switching your equity release plan you stand a good chance of getting a better interest rate. Depending on what your original interest rate was, of course.

Remember, all equity release plans come with fixed interest rates.

This means that the interest rate you get on your new loan will remain the same for the duration of your loan, unlike with other types of loans and mortgages.

Likewise, by taking out a new equity release plan, you stand a good chance of increasing your borrowing potential.

This means that, depending on a number of different factors, you should be able to release more money from your home.

You will be free to spend this amount of whatever you want, including any home improvements, helping loved ones or improving your lifestyle.

Equity release lenders are continuously changing and adapting their equity release offerings.

For example, by taking out a new equity release loan, you might be able to gain access to more flexible offerings.

This could include more flexible repayment options, allowing you to repay some of the loan early and keeping your interest at bay.

Remember, with lifetime mortgages you will be charged interest on your loan, which will turn into compound interest over the years.

This compound interest will be added onto the final, overall loan repayment amount. So, if your equity release loan allows you to repay some of the interest on your loan as you go, then it might be a good idea to.

More and more lenders are now offering this as part of their equity release plans, so by switching, you stand a good chance of being able to keep your interest at bay.

What are the potential drawbacks of switching equity release plans?

On top of the potential advantages to switching your equity release plan, there are also a number of drawbacks associated with doing so.

For example, switching your equity release loan to a new one or to a new lender’s loan will more than likely involve early repayment charges.

These will usually be a percentage of your overall loan amount. Some lenders allow you to repay up to 10% each year of the total loan amount, although some do not.

To find out if your equity release loan includes early repayment charges, then speak to your equity release specialist adviser.

As you will remember from your first equity release loan application, there are a number of set up costs associated with taking out an equity release loan.

If you wish to switch your equity release plan to a new one, then you will have to pay some additional set up costs. This includes the cost of a new home valuation to determine how much your home is worth, the cost of an equity release solicitor and adviser.

How to compare new equity release plans?

Like many people, it’s easy to get overwhelmed by all the different product offerings when it comes to equity release. Comparing equity release plans isn’t easy, especially when you have to compare your current product offerings to new ones.

This is why contacting an equity release adviser is always a good idea.

Not only will they be able to search the landscape for new product offerings, but they will also be able to steer you through the application process.

If you wish to search the market yourself, then there are a number of things that you can do to compare new equity release plans. Some of these things are listed below for you.

Does the lender have good Trustpilot reviews?
Are there any complaints about the lender online?
Is the lender a member of the equity release council?
What are their interest rates and are they better than your current interest rate?
Do they have maximum lending amounts?
Do they have early repayment charges?
What are their set up costs and how are these fees structured?

If you want help comparing equity release plans, then you should speak to a member of our team at Equity Release Warehouse for more help and support. Our team will search the market and compare plans for you.

Can I switch from a lifetime mortgage to a home reversion plan?

If you have already taken out an equity release plan in the past, then you should know the differences between a lifetime mortgage and home reversion plan. If you have taken out either and wish to switch equity release plans, then you might be wondering whether or not you are able to switch from a lifetime mortgage to a home reversion plan [2].

Whether or not you are able to switch from a lifetime mortgage to a home reversion plan or vice versa will depend on a number of different factors.

There are a number of differences between the two types of equity release plans, including the fact that home reversion plans involve selling a percentage of your loan in order to receive your funds [2].

If you wish to switch from one type of equity release loan to another, then you should speak to your qualified equity release adviser for more advice and support.

A step-by-step guide on how to switch equity release plans

If you are considering switching your equity release plan, then you should follow the below step-by-step guide:

Step 1: Find out the ins and outs of your current plan

The first step you should take when looking to switch your equity release plan is to find out what your current offer includes.

You should look into your current interest rate, whether or not you will be charged any early repayment fees and you should also look into how much you have left to owe on your current plan.

With this type of information at hand, you might be able to work out whether or not switching your equity release plans is a good idea.

Once you have made a decision, you should contact an equity release specialist adviser. If you have been unsuccessful in sourcing this information, then rest assured that your equity release adviser should be able to find out a lot of the required and necessary information on your behalf.

Step 2. Search the market

The second step is to search the market for better, more attractive and most importantly, more affordable deals. You should be directly comparing your current equity release offering with different products across the market from a range of different lenders.

You can use a number of different comparison sites, or alternatively you can speak to an equity release adviser who will search the market on your behalf.

They will directly compare your current equity release offering with different lenders across the market. They will be looking out for the most competitive interest rates, early repayment charges and maximum loan amounts.

Step 3: Use an equity release calculator

You can use various equity release calculators, or ask your qualified equity release adviser to use their own to determine exactly how much equity you might be able to release by switching your current plan to a new one.

Your equity release adviser will be able to provide you with a figure, and will also talk you through the ins and outs of the cost of switching, and how much you might need to repay in order to get out of your current plan.

Step 4: Initiate the switch

If you decide that you wish to go ahead with the switch, then you will need to inform your equity release adviser who will then proceed with your application through your lender.

You will also need to apply a specialised equity release solicitor to act on your behalf and work with your chosen lender.

Step 5. Home valuation

As part of your application process, you will need to have a home valuation undergone at your home. This home valuation will determine how much your home is worth and therefore exactly how much you will be able to release.

Step 6. Make any necessary repayments to your old loan and wait to receive your new funds

If you wish to switch your equity release loan, then you will most likely have to make early repayments on your old loan before you can receive your new funds.

Once you have done so and the loan can be processed, you will wait a number of weeks to see your new loan and funds in your bank account.

Remember, as with any type of lifetime mortgage, you won’t need to repay a penny of your equity release loan until you pass away or move into a care home.

The same will be said for your new equity release loan. Your interest rate will be fixed, but will continue to compound, just as your old loan did.

Will the no negative equity guarantee still apply even if I switch equity release plans?

Yes, if you re-apply for equity release and switch plans, even to a new lender, then your no negative equity guarantee will always apply.

The no negative equity guarantee ensures that even if your home decreases in value so much that it no longer covers the loan amount when you come to sell, the lenders will always have to step in to pay off the difference.

This means that your next of kin(s) or loved ones won’t ever be responsible for paying off a penny of your loan [3].

When is switching equity release plans not advisable?

Whilst switching equity release plans can mean better interest rates, more flexible agreements and terms, switching plans might not be for everyone.

There are a number of reasons why switching equity release plans might not be advisable for you and your specific circumstances.

For example, switching equity release plans might not be recommended if you have a substantial early repayment charge attached to your current equity release plan.

Likewise, doing so might not be recommended if the market conditions aren’t great. This means that you might not be able to gain access to better interest rates.

If you are well into your later years, then switching equity release loans might not be advisable as you might not be able to recoup the costs associated with switching plans.

This could include things such as the cost of your adviser, the cost of an equity release solicitor and the cost of a home valuation.

Likewise, you might not be able to switch equity release plans if your home valuations reveal that your home has decreased in value since taking out your original loan.

This could mean that taking out a new equity release loan would be impossible, as the proceeds from the sale of your home will not cover the cost of the loan.

Speak to Equity Release Warehouse

If you are considering switching equity release loans but don’t know where to start, then speak to an Equity Release Warehouse specialist adviser.

Our team of specialist advisers are always on hand to help and talk you through the process.

We will be able to search the market for you, considering alternative plans and interest rates and advise you on what might be best.

However, it is never our plan to force or convince you to do anything. We are simply here to provide you with all of the necessary and relevant information that you need in order to make an informed decision.

Remember, you are never guaranteed a better equity release plan or cheaper interest rates, which is why you should always talk to an equity release adviser before making any decisions.

They’ll use their equity release calculator to work out exactly how much you might be able to release from your home and write up an illustration for you.

Speak to our team today by calling us on 0330 058 1579 or by visiting us online by searching for www.equityreleasewarehouse.com.

References

[1] https://www.moneysavingexpert.com/mortgages/switch-equity-release-deal/

[2] https://www.telegraph.co.uk/financial-services/retirement-solutions/equity-release-service/types-of-equity-release-schemes/

[3] https://www.equityreleasecouncil.com/what-is-equity-release/faq/what-is-a-no-negative-equity-guarantee/