Don’t sign up for an equity release plan unless you’re certain it is the best deal you can possibly get.

Read, and reread, all the paperwork, and make sure you understand everything.

Things to check include

The Costs

If you’re considering a lifetime mortgage, what is the interest rate? Is it fixed or variable? Could you do better elsewhere?

Find out if you can reduce the interest charged by choosing a drawdown plan rather than one that pays out a lump sum.

If you’re looking at a home reversion scheme, what percentage of your property’s market value will you get? Again, could you do better elsewhere?

For both types of scheme, you will also need a full breakdown of the set-up costs, including arrangement, valuation and legal fees these could easily add up to a couple of thousand pounds.

The Penalties

Will you face a penalty if you want out of the deal say, because you come into the cash to pay it off, or find a cheaper one elsewhere?

If you will, see if you can get a similar (or better) deal elsewhere with lower (or no) penalties.

The Future

If you decide to move house, is the plan portable?

If you can’t take it with you, and you can’t afford to repay it and buy a new property, you could be forced to stay put.

If the plan is portable, are there any restrictions on the type or value of property you can buy?

The Worst Case Scenario

Most plans come with a guarantee that you or your estate will never owe more than the value of your property.

Avoid ones that don’t have this kind of no negative equity assurance.

For more tips on making the right choice, read Choosing an equity release plan and How to find equity release providers..

 

Read On / Equity Release Guide