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 June 2020: 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:
Please note: Rates correct as at 12th June 2020. Rates vary by provider & depend on your personal circumstances and whether you prefer a cash lump sum or an income - LATEST OFFER 2.42% special deal through Age Partnership when you use our calculator*.
Equity release interest rates
Equity release interest rates can either be fixed for the life of the plan or variable but with a capped limit. Currently mortgage providers charge between 2.75% to 5.0% and the interest is compounded either on a monthly or yearly basis, meaning it grows every year.
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 2020
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 0808 500 1430 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