Retired people who have released equity from their homes in the last decade could save thousands of pounds if they compared equity release plans and remortgaged to a more competitive deal, equity release specialist Key Retirement Solutions reveals.
Despite the current economic crisis, the equity release market is thriving and, consequently, competition between the different providers has increased. This, in turn, has led to a drastic fall in interest rates on lifetime mortgages
over the last five years, which consumers should take advantage of.
Current rates start as low as 6.09 per cent, which is one per cent lower than some of the rates available to pensioners in 2003, and case studies from Key Retirement Solutions shows how people could save thousands over time if they decided to switch equity release schemes
Dean Mirfin, business development director at Key Retirement Solutions, said that "For most consumers an equity release plan is something they expect to have for the rest of their lives so it is important not to forget that there may be better rates available through the term from alternative lenders.
"After an initial period, exit fees no longer apply for some plan providers so consumers can make a true saving that is not eaten away by fees." Mr Mirfin continued. "When you consider the effect of compound interest even just a slight difference can equate to a considerable saving over time."
According to a case study, when remortgaging an equity release
loan of £98,791 with an interest rate of 7.3 per cent to a plan with the lower rate of 6.49 per cent, the cost would be £5,292.86 lower after five years, £17,110.96 after 10 years, and £37,623 after 15 years.
As can be expected, the sum of money saved increases as the remortgaged loan size increases. Another real life case study shows that it is possible to make a huge saving of £185,199 over 15 years when looking to remortgage a £250,381 loan.
"The process of remortgaging is simple, and it is a good opportunity for consumers to review their circumstances as their needs and priorities may have changed," Mr Mirfin concluded.
"It is important to note, that not all equity release deals are available direct to consumers, so if you are considering remortgaging, it is important to go to a specialist independent advisor who can research the market and determine the best rate available for you."
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