When asked initially what they’re looking for from their Equity Release plan, most people will tell us how much money they would like to release along with an indication of what they want the money for. However, for the majority of clients, their main concern is also about ‘getting the best deal’
But what exactly is meant by the ‘best deal’. For most, this involves obtaining the lowest interest rate as the common misconception is that ‘cheapest is best’, but this usually arises due the client’s lack of understanding about the benefits and features which could suit them more.
I always liken this first stage as similar to buying something new. You may just want the basic item but how many times have you opted for something only to regret not having an extra feature or two.
Take for instance buying a car, do you go for the cheapest model or do you consider extras such as alloy wheels, a sat-nav or air conditioning etc.? Although increasingly these features are becoming standard, even on the base model, there’s usually something extra on offer. By taking up these features, the price rises and in many ways, this is the same with Equity Release plans.
So, let’s look at a few of the basic benefits, common to all plans.
- There is a no-negative equity guarantee with plans meeting the standards required by the Equity Release Council
- You have the right to live in the property for the rest of your lives, assuming you don’t break the conditions laid down by the lenders
However, there are many other features which once explained may become more important than the lowest interest rate. So, if we consider Lifetime Mortgages for example, a few of these features may include the following: –
- Taking a lower variable rate rather than a fixed rate
- Taking a lower initial sum and taking advantage of a reserve or draw-down facility
- Taking into consideration your current state of health
- Having an inheritance guarantee
- Being able to make regular monthly or if preferred, ad-hoc payments.
- Do you need the maximum loan available? Generally, the more you borrow as a proportion of the house value, the higher the rate
These are just a few of the features that are currently available, there are many more as we’ll see when we look at individual plans in the future. Clearly however, the cheapest is not always the best when choosing the right plan for you.
Contact us on 0121 296 9988 to find out which plan is suitable for you