Shopping Around for the best Equity Release Plan
The more information
you gather before making a financial commitment
to any plan the better!
Equity release plans are available from a variety of sources, from building societies, banks, insurance companies to specialist equity release companies. The key feature for purchasing an Equity release plan is to do your research. Many plans charge you heavily if you decide that you no longer require the loan so talk to as many specialists as possible from different companies.
Even when you think that you may have found the best equity release plan which suits your circumstances, you should take time to read and fully understand the "Key Facts" document which will be provided by the company or Independent Financial Adviser you have chosen. The "Key Facts" document includes details of recommendations made, fees which must be paid, cost of the plan and other features.
Some important features to consider include;
| Feature |
Comments |
| Flexibility |
Check just how flexible the plan is. Who knows what is going to happen in the future or even tomorrow for that matter!
- You may want to draw down some more money from the equity in the house or maybe you have decided to sell the house and downsize, this would allow you to repay the loan early.
- Does the plan allow you to do these things? As a general rule, Draw-down mortgages tend to be much more flexible.
- If you wanted to move house could you take the equity release plan with you to the new house?
|
| Fees |
Fees will vary between plans as well companies. See the list below of general fees which may apply. |
| Interest rates |
Take a look at the interest rate which is charged. Generally it will be higher than that charged on standard mortgages. |
| S.H.I.P |
S.H.I.P (Safe Home Income Plans). This is an organisation which was set up in the early 1990's to protect consumers who purchase Home Equity Plans. Business' who are members of this organisation must offer set guarantees to customers. For example: they guarantee the right for the customer to remain in their home for life. |
| FSA |
It is advisable to choose a firm that is registered with the Financial Services Authority (FSA). The FSA is the financial regulatory body for the UK and it holds lists of registered Independent Financial Advisers, along with registered financial companies. |
As with any type of mortgage, you will incur setting up costs and the same applies to the equity release plan you choose. Below are some of the cost implications involved:
Legal costs: approximately £800.
Valuation Fees: approximately £400.
Arrangement Fee: this is often calculated as a percentage of the loan.
Administration Fee: up to £300 although some companies will waive these fees if you decide to proceed with the plan.
Download the Equity Release PDF Guide here - see our other free PDF guides here
Guide Contents
What is Equity Release?
The Different Types of Equity Release Plans
The Different Types of Lifetime Mortgages
Shopping Around for the best Equity Release Plan
Applying for an Equity Release Plan
Frequently Asked Questions About Equity Release Plans
Where to get more help and information about Equity Release
main menu << previous page next page >>
