Early Repayment Charges – Redemption
How much will it cost to repay your plan if you choose to?
Whilst the more popular equity release plans are called lifetime mortgages, don’t let the name guide you, there are options to redeem your mortgage should you choose to in the future.
First of all, it’s important to decide if you want to make an early repayment or if you want to move. If you want to move house at a later date, plans arranged by us have a key feature called portability – allowing you to move the plan to another suitable property without penalty. With this method, you don’t incur any early redemption penalties.
If you do want to make an early repayment, there is a plan currently available where you can choose to pay off up to 10% every year without penalty. Ask us about this on 0800 012 4180.
If you want to downsize at a later date, there are plans available where you can do this without penalty. This allows you to plan your downsizing, releasing equity now when you need it and downsizing at a later date to suit you.
If you want to repay the equity release plan in full, different plans have different conditions so it’s important to get advice. Broadly speaking there are three types of early redemption charges:
Fixed, tapering charges:
Here you may be charged something like 5% of the balance in the first 5 years, 3% of the balance for the next
Gilt-yield linked penalties:
These type of plan charge an exit fee linked to gilt yields. If the rate has gone down between the time you took out the plan and the day on which you try to repay, a penalty will usually apply. Bear in mind that gilt yields are at record lows so any movement down would be a further record low.
No early redemption penalties:
Some providers have waived their early redemption penalties to encourage clients to remortgage their equity release plans.
For a full breakdown of the plans and which early redemption penalties may apply, give us a call on 0800 012 4180 for a free, no-obligation consultation.