Homeowners purchasing equity release products are likely to be charged £500 plus in application fees, money that would be better spent elsewhere.
This fee is often added to the value of the money freed-up from properties, yet this just means the charge increases over time, in line with the interest charged by the loan or at the same rate as rises in the property's value.
Nonetheless, this charge can be avoided.
Finance experts, Economic Lifestyle, highlight that by shopping around older homeowners can get a deal that does not charge an application fee.
Presently, 64% of firms offering equity release schemes charge application fees, on average £554, so the research reveals.
This figure signifies that a third of firms charge nothing.
"Competition is increasing in the equity release marketplace. It is now possible to find a policy that is both competitively priced and does not charge prohibitive fees."
There are two main sorts of equity release schemes on the market at present, home reversion plans and lifetime mortgages .
Home reversion plans give older consumers the opportunity to access part of the value of their homes by selling some or all of their property to a third party.
Thus the homeowner remains in their property until they die or move into a home without having to make any payments. The percentage of the property sold reverts to the finance provider when the home is sold.
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Equity Release Savings on application fees
Thu, 16 Feb 2006
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