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Best equity release rates and deals right now

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Oct 23, 2022

Best equity release rates and deals on right now

Customers who wish to release some cash from their properties and seek the best equity-release schemes are in the right place.

Finding the best equity release deals with equity release can be challenging, but we can introduce you to the leading providers of equity release.

This article will look at the typical equity release interest payments so that you can be confident that you are getting the best UK equity release monthly interest rate from one of our expert advisors.

Click the link below to find the best equity release providers who work with the equity release scheme.

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What is the effect of interest rates on equity release mortgages?

You can take out an equity release plan, such as a drawdown, cash lump sum or lifetime mortgage loan. The equity release interest is added to your outstanding mortgage balance to be repaid when you sell the property. While you won’t be required to repay any interest before the sale, it will reduce the estate’s overall value.

The older-style home conversion plans, where equity is released through selling all or part of your home to the lender, do not have an interest because there has been no borrowing. You will not be the sole owner, however.

This article will only be about the new equity release products, such as a lifetime mortgage.

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The current equity release interest rates are compared

The good news for those who want to get some cash out of their property is that the interest rates on equity release mortgages are now lower than other interest rates.

Customers often ask us what the interest rate is on equity release. While it is not always possible to give exact figures, we can tell you that the average, best equity release interest rate ranges between 3.4% and 6.5% as of the writing.

It is essential to compare equity release plans by looking at the annual equivalent rate (AER) and the monthly rate. This provides a more realistic comparison. Equity release products can earn compound interest; the AER includes this extra factor.

Click the link below to speak with our specialist equity release scheme advisors to understand the available deals better. They can help you find the best equity release interest rates and deals that suit your needs while considering your unique circumstances.

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How to find the best equity release mortgages

Before comparing equity release plans, it is essential to understand the different product types and their differences. To better understand the various equity release plans, take a look at this section or click the link to be introduced to an equity release provider.

You must choose whether you prefer a drawdown or lump sum equity release loan and whether you are willing to make voluntary interest repayments.

The drawdown equity release interest rate does not differ from those for lump sums or similar products. Also, the rates available are broadly the same across all types, so it shouldn’t significantly impact the rate you will be offered.

Also, you will need to verify the equity that can be released for each scheme. Each scheme will have a minimum or a maximum amount that may be taken as a lump sum.

Many lenders will also stipulate a minimum and maximum property market value worth. Some start at £70,000, while others are set at £100,000. Most of these values are set at £1.5m to £4m and sometimes even £6m.

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Are there any equity release rates that are the best in the UK?

When evaluating applications for equity release programs, lenders consider many factors. Each case is unique, but some general guidelines should be kept in mind. These are:

  • LTV Rates for equity release: Different lenders will determine how much equity you have in your home before they can approve you to release any cash. The standard LTV rate is usually 45% or less. You must own at least 55% of the home to be eligible for most products. In certain circumstances, some companies will offer up to 50%. If your LTV is lower, you will qualify for the lowest equity rate interest rates.
  • Access to Broker Only Deals: Some of the most effective equity release programs are not accessible to the general public and must be accessed through a professional intermediary. Working with a broker across the entire market could help you save money.

Rates of interest for equity and bad credit

You might have thought that if you don’t have perfect credit, you won’t be able to access the best equity release deals. You don’t need an affordability assessment to apply for this product. Bad Credit shouldn’t be a problem in getting the best equity release rates.

Where can I find a calculator for equity release interest rates?

Customers often contact us to request an equity release calculator. This will help them choose the suitable equity release mortgage depending on their personal circumstances.

These tools help provide an approximate figure, but accurately portraying the complex nature of equity release products is difficult.

Options for equity release

Two equity release options are available.

  • A lifetime mortgage: you can take out a mortgage on your primary residence while still owning the property. Some of the property’s value can be ring-fenced to provide an inheritance for your family. You have two options: make payments or let the interest roll up. You can sell the property to pay off the loan amount and any accrued interest when you die or move into long-term care.
  • Home Reversion: you can sell a portion or all of your house to a home-reversion provider for a lump sum or regular payments. While you can live in the property until you die, you must agree to keep it in good condition and insure it. Ring-fence can be used to protect a portion of your property, perhaps for inheritance purposes. Unless you take additional cash releases, the percentage you retain will not change regardless of property values. The property is sold when the last borrower passes away or becomes a long-term caretaker. Proceeds from the sale are divided according to remaining ownership. Read more on home reversion plans

Mortgages for life

The majority of people who take out equity releases use a lifetime mortgage.

You don’t usually have to pay any interest while you are alive. Instead, the interest is “rolled up, ” meaning that the unpaid interest is added to the loan. This allows the debt to snowball over a long period.

Some lifetime mortgages offer the ability to pay all or part of the interest. Others allow you to pay capital and interest.

Lifetime mortgages are not the same as ordinary mortgages. They can vary from one lender to another and can be dependent on your age at the time of application.

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Talk to an expert about the best equity release mortgage rates

We can provide more information about an equity release plan and equity release interest rates. Begin your journey by clicking the link below, we will match you with the right type of equity release broker to help you find the best equity release plan for you.

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  • Is there a minimum age that you can get lifetime mortgages? Usually, it’s 55. As we all live longer, the sooner you get started, the less it will cost you in the long term, especially if there is no interest paid during the term of your lifetime mortgage.
  • What is the maximum amount you can borrow? The maximum amount you can borrow is a percentage of your property’s value. However, this will depend on many factors, including your age and the property’s value. When you take out lifetime mortgages, the percentage will increase based on your age. However, some providers may offer higher amounts to people with specific medical conditions.
  • Can the interest rate ever be fixed? Yes. However, if the interest rate is variable, a “cap” or upper limit must exist that will not change over the life of the loan (Equity Release Council standard).
  • Check that the product comes with a “no equity guarantee”. This means that even if your property has been sold and all solicitors and agent’s fees paid, you and your estate will not be responsible for any additional debt (Equity Release Council standard).
  • You must have the right of relocation to another property, provided that the new property is acceptable to your product provider (Equity Release Council standard). Different lifetime mortgage providers may have other policies.
  • It doesn’t matter if you can pay all or part of the interest. You can make monthly payments, lowering the interest due when the property is sold. A lifetime mortgage that you can pay monthly is possible. However, your income might affect the amount you can repay. Providers will need to verify that you can afford the monthly payments.
  • You can either withdraw equity in smaller amounts at your convenience or in one lump sum. You only pay interest on the money you withdraw. This is a benefit of taking money out in smaller amounts. You may be able to take out smaller lump sums. However, you should verify if there is a minimum amount.

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How we can help get you the best equity release rates today

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