To release equity via a lifetime mortgage, your client must be a UK homeowner aged 55 or over. E quity release interest rates are lower than they have ever been. This makes a grand total of £132,665 to be repaid. Your email (so we can send your newsletter): By supplying your details, you are agreeing to our privacy policy. The MER is often slightly lower than the AER. What if I can’t pay off my interest-only mortgage? By consolidating your debts into a mortgage, you may be required to pay more over the entire term than you would with your existing debt. For example, if the lenders offering the best interest rate products don't approve of your property, you will have to choose a lender who will, which could be at a higher interest rate. According to the Equity Release Council (ERC), the number of products surpassed 300 in January 2020. With lifetime mortgage interest rates so low, the impact of this build-up is lessened, minimising the effect that releasing equity could have on your estate’s value. Average interest rates at the end of 2018 were 5%, some lower, some slightly over the 5% interest rate. Equity release plans have “rolled up” charges, which means that interest compounds and the overall debt increases quickly. This is cheaper than rates have been for a number of years – yet still significantly higher than those for most standard mortgages. This guide has been written by Andy Vickery CertCII (MP & ER). carefully. MER represents the rate of interest added over the year but divided over every month. Equity release interest rates hit record lows in 2020, How to pay off a mortgage early using equity release. This offers a degree of certainty, as you know what the highest interest rate can be. However, some plans with the best interest rates in the market may not be available. Responsible Life Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register ( under reference 610205. Information correct at date of publication. Some lenders also offer the flexibility of allowing you to use the Equity Release to repay these debts. To receive your personalised illustration, click here to request a quote. Registered OfficeHarwood House43 Harwood RoadLondonSW6 4QP, Head Office9 Linnet GardensPortisheadBristolBS20 7NB. Repayment is only due once the last surviving homeowner either dies or enters permanent long-term care, at which point it is usually achieved with the sale of the home. To provide you with a market-leading equity release service, we have teamed up with Responsible Equity Release. Even if you already have equity release, you may now be able to get a lower interest rate plan that could save you thousands of pounds. Responsible Equity Release is a trading style of Responsible Life Limited. Interest rates for equity release are higher compared to residential mortgages, which means it could save money in the long term and have no impact on the family’s inheritance. While everyone's circumstances are different, we have compiled examples of clients we have helped and listed the interest rates applicable to their plans. Many people believe that they cannot continue to fall, and are going to start increasing at some point. Even with the events of 2020, many over-55 homeowners have still made the decision to take advantage of their home’s value. Clients are looking for enough money to repay their existing mortgage and secured loans. How interest rates have changed over time, contact us to arrange your free consultation. They are on hand for a free, no-obligation chat about equity release and to answer any other questions that you might have. AER represents the rate of interest added over one year. Also, most Rio rates aren’t fixed for life, as is the case with equity release. There is a wider range of options than ever if you are a homeowner who wants to know how to release equity from your home, and many allow you to make penalty-free ad hoc payments. At age 75, if you wanted to release 25.00% of your property value, the best interest rate would be 2.46% (AER). Mortgage acceptability is however based on affordability and many providers have a maximum age threshold. The interest rate on equity release products will change from time to time as the equity release providers react to the economic environment. Lifetime mortgage interest rates The interest rates on our lifetime mortgages are fixed, meaning they won't change over time. At the moment, equity release interest rates are at the lowest rate in five years. To receive a monthly email with the latest equity release interest rates, simply complete the form below. Should you be ready, they could also book a no-obligation appointment with an equity release adviser for you. With a lifetime mortgage, you need to think about the effect of interest charges on the amount you owe. What are equity release interest rates? Usually, lifetime mortgages offer higher rates of interest than standard fixed-rate mortgages. However, lower interest rates have continued to fall. With lifetime mortgage rates you can avoid any nasty surprises if interest rates rise. Products which have extra features, such as a reserve facility or inheritance protection, may mean you have to pay a premium for this with a higher interest rate. These include: The most significant impact on your interest rate is the amounts you require to borrow as a percentage of your property. Lifetime mortgage interest rates are at an all-time low. How is equity release paid when you use a lifetime mortgage? If you are considering Equity Release we recommend you read through is equity release right for me? I am glad that you found my article helpful. Clients would like to make payments towards the equity release interest owed and would like the option to downsize or repay, upon the death of the first borrower. But if you choose not to make repayments, the interest will build up over time and be added to the sum owed. You can now access the best equity release rates in history – complete with extra built-in safety features like the no negative guarantee. The above article was created for Telegraph Financial Solutions, a member of The Telegraph Media Group. If you have a history of poor health, these enhanced plans can provide either a higher maximum lump sum, or a lower interest rate, than standard plans offer. With a lifetime mortgage, the most popular type of equity release scheme, you are under no obligation to make repayments. Generally, the closer to the maximum available to you which you wish to release, the higher the interest rate. Equity release can impact your entitlement to mean tested benefits and will impact the value of your estate. Like other types of lifetime mortgage, an interest only lifetime mortgage is a way to release equity from your home to spend as you wish – and you need to meet many of the same requirements, like being at least 55.. Saying this, over the last few years the interest rates on equity release have fallen, which means that it is now cheaper to borrow through equity release than it was even a few years ago. An ever-increasing number of products also gives homeowners greater flexibility when it comes to repayments, making this the optimum time to consider equity release as a means of accessing tax-free cash from your property. * The overall cost for comparison is 2.47% APR. Low average equity release interest rates continue to feature as a key trend in the market, with the average interest rate in January 2020 at 4.48%****. It is essential to understand the total cost of the plan over the estimated term, as sometimes plans with lower interest rates include other fees which may make the plan more expensive.
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