‘Hindsight’ as they say is a wonderful thing! 

However, back in the early 2000’s who would have thought that equity release interest rates & plans themselves would alter so drastically?

Again, speaking from experience, this article attempts to discuss the reasons why one should consider reviewing their old equity release plan.

With interest rates in the residential mortgage market now at their lowest ever levels, this reduction has also impacted on the equity release market.

So now is a great time to assess whether your old plan is due for a review.

Going back to the early 2000’s the likes of Norwich Union, Northern Rock & alike were the only major companies offering equity release schemes. In the space of approximately 8 years, this market has now grown to over 20 companies offering such products.

So has this competition benefited the market?

Most definately.

Not only has it increased competition, it has also lead to innovative products to be developed which in turn has provided greater flexibility to the equity release plans.

For instance the drawdown equity release plan which originated over 4 years ago was developed to create a ‘niche’ in the market, soon other companies jumped on the bandwagon.

However, the main effect of the availability of more providers has been the gradual decline in equity release interest rates.

Back in the early 2000’s Norwich Union has interest rates in excess of 8% & even in 2003 had rates as high as 7.79%.

So what can be done?

Well in essence an equity release scheme is a conventional mortgage, but with no monthly payments. It holds a first legal charge over the property & has no fixed term.  

Back in the early equity release days no-one envisaged a remortgage market for this product. It is designed to run for the rest of one’s life; until the last person has died or gone into care.

However, from experience the original cash amount release has not always gone as far as people intended. Subsequently, requests for further releases of equity have arisen & its the advice to this effect that determines which route should be taken.

Independent financial advice should therefore always be requested.

I will cover the options available & the process of remortgaging your equity release scheme in the next article.