How To Switch Equity Release And Save Money | moneyfacts.co.uk

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Derin Clark

Derin Clark

Online Reporter
Published: 29/04/2021

Borrowers who took out an equity release plan several years ago could save themselves money by switching onto a new plan, as new research shows that equity release rates have fallen significantly in the last five years.

Earlier this week, we reported that over the last five years the average rate on equity release plans has fallen by 2.08%, down from 6.15% in April 2016 to 4.07% on 26 April 2021. As well as this, during the same time period, the number of equity release plans has increased significantly, up from 66 to a record high of 510.

Although the increase in choice and fall in average rates is good news for those currently considering equity release, it could also mean that those who took out an equity release plan in the past may be able to reduce their interest rate by switching plans. Even two years ago, in April 2019, the average equity release rate was 5.09%, which is 1.02% higher than the average rate available in April 2021.

In addition to this, with more choice available in the market, equity release borrowers may be able to switch to a plan that better suits their borrowing needs today. For example, borrowers can now choose plans that allow them to repay some of the money borrowed or make interest repayments. For those who are considering switching plans, it may be worthwhile speaking to an equity release broker who will be able to provide the right options available for their individual needs.

How to switch equity release plans

At the moment, equity release lenders are not obliged to contact borrowers to let them know if they could save money by switching equity release plan. This means that it is down to the borrower to be proactive about following rates and switching plans if it is beneficial to them.

Those considering switching should, however, keep in mind that they may have to pay additional fees when switching plans.

Once a borrower has decided to go ahead with switching plans, they should contact an equity release broker, such as our preferred broker Hub Financial Solutions, who will be able to help them choose a new plan and assist them through the switching process.

To find out more about equity release, read our guide Equity Release Explained.

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