Can I repay an Equity Release plan early?
The short answer is yes. However, it might not be the best idea to do so. Here’s a few reasons why you need to think carefully before paying off your Equity Release plan early.
Equity Release plans are designed to last for your lifetime and as such they are not meant to be repaid early. However, it is generally acknowledged that sometimes this is what the borrower wishes to do and therefore a facility to do so is usually put in the terms and conditions.
Early repayment penalties are the key to whether or not repaying the loan early is a good idea. Such penalties are set out clearly in the contract and the illustration you were given when you first took out your plan.
If you are in any way unsure of them, you can get copies of your original paperwork from your current provider, as well as getting a current statement setting out what the penalties would be if you repaid early.
South West Equity Release can find these details out for you for free and without obligation. All we would need is a simple letter of authority allowing us to talk on your behalf to your current provider.
Always take advice from an experienced and qualified adviser before paying your Equity Release plan back early. It could cost you more than you realise in fees.
Why would I want to repay my Equity Release plan early?
There are few reasons for repaying an Equity Release plan early. perhaps you have had an unexpected windfall or inheritance. You may have decided to move to a smaller house and the change of property value means that some of your original Equity Release money has to be repaid as the new property is not able to support the percentage of loan you already have.
A more common reason would be that you are changing your Equity Release provider either to take advantage of better terms such as a lower interest rate, or to take a further amount of money.
Whatever the reason, you should ensure that you understand all the costs involved with early repayment of your plan.
Remember, any fees associated with the alteration of, or any repayment of, your Equity Release plan will be in addition to all the normal costs associated with moving house and/or taking a new plan with a new provider.
To understand the features and risks of a Lifetime Mortgage, please ask for a personalised illustration.