Equity Release London understands the importance of regularly reviewing older equity release schemes on an annual basis. The aim is to ensure you are still obtaining the best deal for your personal circumstances. As we have witnessed over the past decade & even more so over the past few years, lifetime mortgages are undergoing a significant innovation from both existing & newer entrants to the equity release marketplace.
To Remortgage Equity Release requires a significant amount of knowledge and expertise required for the calculations involved in the equity release remortgage analysis. Firstly, we need to understand the existing equity release scheme, including data such as lender’s name, interest rate (AER), balance including potential early repayment charges, any options and the daily accrual rate of interest being added. Once this has been ascertained we can then progress to the switch plans calculator.
Switch Equity Release Analysis Calculations in principle works by projecting forward the future balance of the existing scheme, typically over the next 15 years but dependent upon age. In comparison would be the potential new plan, with the starting point being the current balance plus new set up costs of the new plan, penalties for early repayment including any admin closure fees. Once the two tables are lined up the comparisons can start.
Should I Stay or Should I Go? By comparing the year-on-year balances for both the old & new, we can ascertain the yearly savings/losses. Assuming interest rates are lower on the new plan, the results will establish where the break even point lies. This is the first year where the the costs of leaving the old scheme match the benefits of the lower interest rate of the new equity release plan. From there, the savings will grow, the level of which will be dependent upon the difference in rate.
Actions Following Analysis