What Are The Interest Rates On Equity Release?

Interest Rates

Can Equity Release Schemes be TOO Expensive? Find Out Now.

First, note that:

Equity release rates have currently plummeted to around 2.673%. Drastically shifting everything! Release your money and save thousands of pounds by learning how you can access the lowest possible equity release interest rates.

I think you’ll concur that

With times shifting, higher stagnation rates of economic growth, the popularity of equity release & lifetime mortgage plans are increasing more rapidly than before.

The highest benefit for you comes from the fact that interest rates on equity release are currently in their all-time lows.

As you know:

High popularity brings along countless variation and multitudes of service providers. Alone, this stresses the necessity for you to get better acquainted with the fixed costs and rates.

With that out of the way, you must seek professional consultancy.

This guide will help you comprehensively pilot your way around understanding interest rates of equity release whilst simultaneously saving on your time and finances.

How Do The Charges on Interest Work?

Considering the past few years; Interest rates on equity release have been higher than those on a primary mortgage.

Interest Rates

Currently, equity release rates have dropped, some as low as 2.65%, and that can become the consorted life-value of your financial obligation.

Isn’t that great?

The amount of interest you’ll pay at the end of your equity release will vary regarding the type of scheme you choose, also how long it runs. Remember that this will only end when you are ready to sell your property or shift into a permanent care home.

What does this imply for you?

First, let’s consider how, when you don’t make monthly repayments during limited lifetime mortgage proceedings, the result is a mounting interest bill. Every year, they add due interest to your total loan, and more interest accumulates.

The interest perpetuates its growth. You commonly know this as ‘compound’ interest.

You will still benefit:

In the past, when you had a defined interest value of 6%, the cost on your equity release account’s interest will double its value after about 12 years. AMAZINGLY, it will now take longer with the current interest rate of around 2.25%.

It would help if you understood something.

Signing up for an equity release plan with a “no negative equity” guarantee will protect your finances. You will make sure that what you owe to the lender never exceeds the value of your property.

Interest Rates

Also, when you take out a drawdown equity release plan, you will reduce the total amount of interest paid at the end of the scheme instead of the initial lump sum.

To simplify

When you release a lifetime mortgage, the charge on your interest rate will be higher than it would be on a regular mortgage. Also, the amount you owe can multiply if you let it roll-up the interest.

That said:

Lifetime mortgages are structured as long-term arrangements where repayments get made after the borrower dies or moves into permanent care and the property’s sold.

Some lenders will remove the early repayment charge for borrowers that settle their lifetime mortgage because of a residence change. Other lenders may permit it to get repaid after the first borrower dies and if the remaining borrower desires to shift and reinstate the mortgage.

Even Better:

After releasing equity as a home reversion plan, you can repurchase your estate or a share in it if you wish. But you will have to pay full market value for it. Different plan providers will offer multiple options, and it’s up to you to ensure getting the most outstanding deal.

Speak to an adviser and find out more.

For instance, Aviva offers its borrowers an accorded interest estimate of up to 3.75%. Legal and General offer a set ratio of 3.40, More2Life also offers a 3.40% preset feel, and LV offers around 6.04%.

Before you decide which plan to go with, you must examine the entire package and not just the valuation.

Contrasting Past vs Current Equity Release Interest Rates

A few years later, the equity release looked a lot different, as its interest rates were much higher.

Today, getting an equity release is a lot cheaper, with some plans offered at low-interest rates of 2.25%.

Interest Rates

Let’s outline this more clearly with some practical numbers:

If you had released £10,000 @ 5.97% in 2015, the amount they’d owe after ten years is £17,857.5, while after 20 years, it would be £31,890.

Let’s compare this with today’s interest rate.

If you take out a plan at 2.25%, after ten years, you’d only owe £12,492! Note that this is with the assumption that you have no monthly repayments at all!

Important! The paradigm has shifted; equity release rates have plummeted to around 2.673% now.

I think you’ll agree with that

Times have changed; stagnating economic growth rates, equity release, and lifetime mortgage schemes are becoming more popular. The best part is the fact that equity release interest rates have hit all-time lows.


Popularity brings constant changes and many providers; This raises the importance of becoming acquainted with the current rates, fees, and costs.

You must seek professional advice.

PRO TIP: If you’ve taken out an equity release plan at a higher interest rate some time back, you must consult to see if you can switch to a scheme with a lower interest rate.

Is This Expensive? A Quick Case Study:

Let’s look at the current interest rate of 2.25%. You’ll realise that it’s much cheaper than it was back then.

Simply meaning that your property value must increase by a low 2.25%, and you may still enjoy more growth on your property along with having taken out cash.

According to this article and prediction:

Regardless of the economic turmoil ignited by the pandemic (Covid-19) and Brexit, the UK’s property market enjoyed quite a robust year in 2020.

Interest Rates

Let’s look at the average prices of homes in London and the UK, also predictions for the capital’s property market for 2021.

You notice that:

Nationwide: London’s average touches £486,562. Nationwide reports that the annual house price growth “accelerated further” in December in the most recent house price index. It reached a six-year high of 7.3%, up from only 6.5% during the month before.

Thus, even if your property only experiences growth at 4%, with an equity release interest rate of 2.25%, your net property value will still increase.

What does this mean exactly?

It means that you will get:

More cash from the equity release to spend as you wish today.

Zero repayments.

You’d remain to occupy your home.

Assuming property prices grow according to expectation, you’d get way more extra funds in the net growth of your property.

How Can You Access The Best Interest Rates For Equity Release?

Typically, even though the equity release interest rates swing at around 5%, the rise in competition within the equity release industry has drastically forced providers to decrease their interest rates. It currently stands at a staggering 2.25% – History has never seen such a low.

Now, you can access the best equity release rates in history – alongside built-in safety components like a no negative guarantee.

The rate of equity release that your broker will offer depends on prevailing market conditions and other variables, including your age, health, and the total value of your property.

Interest Rates

How do you ensure the equity release rates you receive are the most beneficial on the market? You must ensure to consult and utilise a financial provider that is a registered member of the Equity Release Council.

They’re obliged to inform you whether they’ll provide selective or entire market services.

Making equity release rate comparisons is simpler than ever.

Before consulting with a financial advisor, you utilise online services to compare equity release rates. You can make use of one of the many rating and comparison websites.

Such websites will typically compare entire market rates and simplify your identification of the companies which offer unique features like interest-only repayments and ring-fencing.

Here is something that you must know before you do that:

As you make your comparisons online regarding the best equity release rates, you must note the annual percentage rate (APR) instead of the nominal or advertised rate.


The annual percentage rate will include additional fees and costs, whilst the advertised rate will exclude them.

Understanding the exact costs, including fees and additional costs that you will incur with an equity release, will help you weed out products that come with unnecessary and excessive charges.

Get started today and see your money grow!

In Conclusion

The present is the BEST time to go for equity release!

The interest rates are currently at an all-time low, and you’ll enjoy growth regarding your property. Your bank account will thank you.

It’s very tempting to only focus on the immediate advantage you will receive from the money you unlock with an equity release. Still, it would be best to look at how it will affect your overall future choices and financial situation.

With all said

It remains necessary for you to get independent advice before embarking on the journey to releasing the equity in your house. A registered financial adviser will walk you through all the specific requirements and terms – including the total cost you will have to pay to enjoy your equity release.

All this will help you determine whether equity release it the right option for you.

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