Compare Equity Release Interest Rates

Compare equity release lifetime mortgage interest rates currently on offer from the leading providers and you could get a tax free cash sum to use as you wish.

The comparison table below shows you some of the best equity release interest rates on the market, all of which come with a no negative equity guarantee for your protection.

These are just a few of the lifetime mortgages available so when you are ready, we recommend you speak to an independent expert who can compare the b the whole equity release market on your behalf, free of charge.

Latest news April 2021: Equity release interest rates are at their lowest ever and will be fixed for the rest of your life - so now could be a good time to consider your options

Lifetime mortgage interest rates

Let's take a look at how the leading lifetime mortgage providers compare:

Provider Interest Rate APR Type Product How much cash could you release? More Information
Legal & General 2.53% 2.60% Fixed Drawdown Calculate Now Go to Review
Aviva 4.30% 4.40% Fixed Lump Sum Calculate Now Go to Review
Pure Retirement 2.41% 2.56% Fixed Lump Sum Calculate Now Go to Review
LV= 2.46% 2.50% Fixed Lump Sum Calculate Now Go to Review
Just 3.30% 3.30% Fixed Drawdown Calculate Now Go to Review
Hodge Lifetime 3.98% 4.20% Fixed Drawdown Calculate Now Go to Review
Canada Life 2.85% 3.00% Fixed Drawdown Calculate Now Go to Review
One Family 2.80% 3.10% Fixed Lump Sum Calculate Now Go to Review

Please note: Rates correct as at 3rd December 2020. Rates vary by provider & depend on your personal circumstances and whether you prefer a cash lump sum or an income - LATEST OFFER April 2021 - 2.78% AER special deal through Age Partnership when you use our calculator*.

For your peace of mind..

Overchoices is a member of the Equity Release Council and regulated by the FCA. We recommend Age Partnership the UK's leading equity release specialist

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Equity release interest rates

Lifetime mortgage interest rates range from 2.30% to 4%. Rates can either be fixed or variable with a capped limit. The cost of equity release has reduced as interest rates are now lower than before. However, as the interest charged is compounded, lifetime mortgages remain significantly higher cost than standard mortgages.

The good news is that rates have come down since 2018 where they were generally over 5%. 

If you prefer to keep your interest rates on equity release low, some lifetime mortgages let you repay a percentage of the interest each year, so the loan won't be as high when it's repaid.

Also, by choosing a drawdown lifetime mortgage that lets you take an initial amount and further cash sums as and when you want, you’re only charged interest on the equity released, not the money held in reserve. The interest rate charged for each payment will depend on the rate at that time.

Read more about the different types of lifetime mortgages available to you. 

Find the best equity release interest rates

If you're considering unlocking money tied up in your home but want to understand more about the current interest rates available on a lifetime mortgage, then it's important to get advice from the experts.

Leading specialist Age Partnership compare equity release across the whole of the UK market, meaning they’re not limited to certain companies. What’s more, they’ve also agreed special rates and incentives with lenders you may not be able to get elsewhere.

They even offer a price beating guarantee that pays you £500 if you find a better like for like quote elsewhere; so what have you got to lose - Call 0113 2093531 and mention Over50choices.

How does the compound interest on equity release work?

Compound interest is charged either monthly or annually depending on your chosen lifetime mortgage; here’s how it works:

Monthly interest lifetime mortgages:

  • The loan is secured with either a fixed or a capped variable interest rate
  • Interest is added to the loan each month plus the interest accrued in previous months

Yearly interest lifetime mortgages

  • The loan is secured with either a fixed or capped variable interest rate
  • Interest is added to the loan each year plus the interest accrued in previous years

A Simple Example

Year Loan 6% Interest Rate Total owed
1 £50,000 £3,000 £53,000
2 £53,000 £3,180 £56,180
3 £56,180 £3,370 £59,550
4 £59,550 £3,573 £63,123
5 £63,123 £3,787 £66,910
This is the Equity Release Council’s example of how the annual payments on a £50,000 loan with an interest rate of 6% could work

Therefore as you are paying interest on interest accrued, the size of the loan grows more quickly than with a standard mortgage, but more so with the monthly interest equity release plan.

Do keep in mind though that although your equity release loan will be growing, hopefully so will the value of your property and therefore the equity available to you.

What to look for when comparing equity release

If you have started to compare equity release yourself, there are a number of things to consider in addition to the interest rate charged:

  • Are you wanting to take the money in one go or do you need a lifetime mortgage that offers a draw down option so you can access the cash as and when you need it?
  • Would you like to guarantee that some equity is left for family?
  • Would you like the flexibility to lower the final loan by repaying some of the interest on a regular basis or as and when you like?

So your comparison shouldn’t just be about money, it should also be about how the lifetime mortgages works and the flexibility it offers you - which is where a qualified equity release specialist can help.

An easier way to compare equity release schemes

If you are considering unlocking the money that is tied up in your home but want to know more about it, you’ll find a wealth of information right here at Over50choices. We can guide you through all aspects of both lifetime mortgage and home reversion plans; from understanding more about the different types of plans available, right through to the pros and cons.

You can also use our equity release comparison table to compare the key features available and read our reviews on leading providers.

Getting the best advice

Whether you prefer to speak to Age Partnership over the phone or face to face, the choice is yours. They will talk through your requirements, fully explain how plans work; help you consider whether it’s right for you or if other options are available such as downsizing and provide you with comparisons and a written illustration that you can talk through with your family.

The independent advice you get is free; you only pay of you decide to go ahead and your Age Partnership adviser is there to help and guide you every step of the way. These articles could help if you want to find out how much equity you can release or  how much equity release costs to arrange.

Answers to your questions

  • How much interest do you pay on equity release?
    • This will depend on the rate of interest charged by the plan provider. As at 1st May 2020 rates vary between 2.58% and 5.15% depending on the scheme you choose.

  • Do you have to pay interest on equity release?
    • When you release equity from your home, the loan is only paid back once you have died or moved into permanent care, therefore interest is charged on either a monthly or annual basis throughout this period.

  • What is the cheapest equity release interest rate?
    • The cheapest rate may not be the best one for you, as it will depend on the scheme that you need to provide a cash sum and or a regular income.

  • What are the best equity release interest rates?
    • To get the best equity release interest rate it’s worth speaking to an independent expert like Age Partnership who can compare the whole of the market. Their initial advice is free and they have also secured preferential rates with lenders you may not get elsewhere.

  • Can you pay back equity release?
    • Some equity release schemes allow you to pay back a percentage of the interest on a regular basis to help reduce the size of the loan. You can also repay your loan early however you may be subject to early repayment charges.

  • Is equity release interest fixed?
    • The interest rate on your equity loan can be fixed for the life of the scheme, meaning you always know where you stand. If you choose the drawdown option, you will be charged the interest rate available at the time of drawing down the funds.

  • How is interest calculated on equity release?
    • The interest charged on an equity release loan is compound interest. This means that you pay interest on the loan but also any interest accrued to date.

We know it's a big decision!

That's why we have teamed up with Age Partnership one of the UK's leading equity release specialists.

Find out how much cash you could release by trying the calculator.

Equity Release Calculator

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