For a great number of people considering equity release, the interest rates offered are a good indicator of a great deal. Many people consider it very important to be making savings. Interest rates can vary greatly across the different plans and schemes, therefore, it is important to be aware of all your options.
Using Equity Release Calculators
Equity release calculators are free online tools offered on the websites of equity release companies and brokers. They allow the home owner to gain a tailored quotation of the potential equity release schemes which would be available to them. These tools are easy to use and require the home owner to supply basic information such as their age, gender and property details including the current market value of the property and the balance of any current mortgage or finance secured on the property. The calculators are pre-programmed to incorporate this information into the formula for determining qualification and will respond with details of the plans which are suited to the home owner’s particular circumstances. This can produce significant time savings. Interest rates, maximum equity release sums and other plan details are displayed in order to allow the home owner to make comparisons.
The calculators can produce accurate results. However, there are several things to consider when using this type of tool. These include:
• They are only as accurate as your information: The calculators are purely mathematical and have no capacity to check the accuracy of your information. Therefore, if you under or overestimate details such as the property value or balance of your existing mortgage, the figures produced will be very inaccurate. It is worth taking the time to research your information fully before using a calculator, including researching the sale prices of similar properties in your area and asking your current lender for an up to date balance.
• They are tied to a particular range of products: The calculators are programmed with the details of the particular plans associated with the website. This will mean that if you are using an equity release provider’s calculator, it will only display the results from that particular provider’s product range. The best way to gain a greater insight into the market place is to use a number of different calculators, especially those linked to independent advisers. This will give you access to a greater degree of schemes and increase the likelihood of finding the best possible savings, interest rates and deals.
Consult a Professional and Experienced Equity Release Adviser
Many people think that they can seek out the best possible deal and interest rate by themselves. However, it is worth considering that equity release advisers can have access to exclusive products and schemes which may be the best possible option for you. It is important to consult with a professional and experienced adviser. However, it is a good idea to take the results from your equity release calculator searches to provide a basis for comparison. This will ensure that you can have confidence that your adviser has found you the best possible deal.
Remember: the Interest Rate is Not the Only Factor!
It is important to remember when you are looking for a good deal or savings, interest rates should not be the only factor you consider. For some people looking for the maximum amount of equity release possible, they may be able to release a higher amount with some plans but incur a higher interest rate. Alternatively, it is important to assess the charges and fees associated with the scheme. Some plans may look extremely attractive with a great rate, but you may discover restrictions and limitations including very high early repayment charges. This could be extremely costly should your circumstances change in the future.
Other plans may offer more attractive terms, such as draw down lifetime mortgages, which allow home owners to call down funds as and when they require them up to their draw down limit. This can be beneficial as the interest is only applied to funds which have been released. While the interest rate may not be as attractive, there is a potential that you may incur less charges in the long term, if you have no immediate need for a large lump sum. It is therefore important to check all the advantages and disadvantages of the particular scheme, not just the interest rate before proceeding. Your equity release adviser will be able to assist you with the key facts of specific schemes which will highlight the pros and cons, ensuring you have all the information needed to make an informed choice when moving forward.
If you are interested in equity release, it is important to research all your options in order to evaluate the best deal and savings. Interest rates are an important consideration, but they should not be the only deciding factor. It is important to explore all the advantages and disadvantages associated with the specific scheme before making a decision about moving forward.
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