Compare Equity Release Interest Rates

Compare equity release interest rates with leading lifetime mortgage providers and you could get a tax free cash sum to use as you wish. This comparison shows some of the best equity release interest rates available, all of which come with a no negative equity guarantee for your protection.

These are just a few of the schemes available so when you are ready, we recommend you speak to an independent expert who will compare the best deals available across the whole of the market free of charge.

Latest news January 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

Let's take a look at a comparison of leading providers:

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 Jan 2021 - 2.27% 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

Equity release 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, they remain significantly higher 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 perecentage of the interest each year, meaning 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 equity release 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. 

Best equity release interest rates 2021

If you're considering unlocking money tied up in your home but want to know more about the current equity release rates, 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, in addition to comparing the best equity release interest rates, 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 just mention Over50choices.

How does the compound interest on equity release work?

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

Monthly interest lifetime mortgages:

  • The loan is secured with either a fixed or a capped equity release interest rate
  • Interest is added to the loan each month based on the original loan plus the interest accrued each month

Yearly interest lifetime mortgages

  • The loan is secured with either a fixed or capped equity release interest rate
  • Interest is added to the loan each year based on the original loan plus the interest accrued each year

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.

How much does equity release cost to set up?

The cost of equity release includes the loan and interest, which are only repaid once you die or move into care, plus the cost of arranging the loan in the first place. According to the Equity Release Council, this currently costs between £2,000 to £3,000 and includes:

  • Advice
  • Administration and application fees (depending on the lender)
  • House valuation
  • Solicitors fees for providing independent legal advice

By talking to an industry expert like Age Partnership, your initial advice is completely free of charge meaning you only pay if you decide to go ahead.

The amount charged is typically 1.95% of the cash sum you release or a minimum fee of £1,495, which is only payable once your equity release plan is in place.

The benefits of choosing a company like Age Partnership are as follows:

  • They compare the whole of the equity release market , not tied to any particular mortgage provider
  • They have arranged special rates with lenders that you may not be able to get elsewhere
  • They work on your behalf agreeing reduced set-up costs with lenders and where possible cashback payments
  • Their initial advice be it over the phone or face to face is completely free
  • Your Age Partnership adviser is there to guide you through the whole process

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.

What to look for when comparing equity release

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

  • Are you wanting to take the money in one go or look for a company 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 repay some of the interest on a regular basis so the final loan is lower, or perhaps make repayments as and when you like?

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

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 - this article could help if you want to find out how much equity you can release.

*subject to elegibility

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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