Equity release and interest rates

The Equity Release Experts are here to help with equity release advice. We'll explain the benefits, drawbacks, and costs of equity release to help you make an informed decision.

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Equity release could be a way to release some of the tax-free funds that are tied up in your home, without the hassle of having to move. However, it's important to know that equity release is a long-term financial decision, so before you commit to anything, it’s vital that all your questions have been answered.

If you want to know if equity release is the most suitable option for you or what interest rates are available on lifetime mortgages, allow us to help. We pride ourselves on our reliable, transparent advice, and are always here to help you understand equity release and what it entails.

 This is a lifetime commitment - check the benefits and drawbacks before you go ahead.

What are the interest rates with equity release?

When you have been carrying out your research, we’re sure you have questioned what interest rates are available. Naturally, the answer to this is completely dependent on which plan is the most appropriate to meet your financial needs. Compound interest accrues on lifetime mortgages but no interest is charged on a home reversion plan.

Lifetime mortgage

If you are a homeowner aged 55 or over, you might decide that a lifetime mortgage is the type of plan you would choose. A lifetime mortgage, which is a loan secured against your property, will allow you to release some of the equity tied up in your property. This type of plan allows you to retain the ownership of your home. This will allow you to release some of the money that is tied up in your property, while still retaining full ownership.

Some lifetime mortgages allow you to pay some or all of the interest, however with a lifetime mortgage there are typically no monthly repayments to make as the loan, plus roll up interest, is repaid when the plan comes to an end. The interest rates on most plans can also be fixed for life, your adviser will go through these features with you in your appointment.

Home reversion

If you’re 65 or over, another way to release cash from your home is to sell all or a percentage of your property's value to a reversion company. In return, you’ll receive a tax-free lump sum.

The amount you receive will depend on your age, the value of the property and the percentage that you sell. It’s also important to note that you will not receive the full market value for your home, and you will not retain legal ownership of your home. You can remain in your home rent free for as long as you wish. Whilst you will no longer be the legal owner of your home, you can choose to live in it rent free for as long as you wish.

With this type of equity release plan, there are no monthly repayments to make or interest accruing. At the end of the plan – when your house is sold – the reversion company will take their percentage of the proceeds and the remainder will be left to your estate, if you did not sell 100% of your property.

Lifetime mortgage benefits

Your specialist equity release adviser will explain:

  • You can unlock cash from your home, tax-free, to help meet your needs in later life
  • You’ll always retain full ownership of your home and can stay in it for as long as you wish
  • You can choose to make reduced or no monthly repayments to suit your circumstances
  • You’ll never owe more than your home’s worth
  • You may be able to remortgage your plan in the future to release further funds or secure a better interest rate, although this isn’t guaranteed and may be subject to early repayment charges

Lifetime mortgage drawbacks

Your equity release adviser will also outline the following important things to think about:

  • A lifetime mortgage is a loan secured against your home and subject to compound interest, meaning the amount you owe can grow quickly
  • Equity release will reduce your financial options in the future
  • Equity release will reduce the value of your estate and may affect your entitlement to means-tested benefits
  • Equity release may leave you with limited or no property equity remaining
  • A lifetime mortgage is a long-term financial product and is not designed to be fully repaid until the death or entry into long-term care of the last remaining borrower, otherwise early repayment charges may apply

Speak to equity release specialists

You have to receive advice before releasing equity from your home. It’s vital that you explore the different equity release products available to decide which is the most suitable for you.

When you come to us, we will discuss important factors such as interest rates and how the interest will accrue, as well as set-up fees.

Phone The Equity Release Experts on 0800 188 4812 or ask us to call you back. We’re here to help Monday-Friday, 9am-5.30pm.

Alternatively, by using our free, no-obligation equity release calculator, you will be able to see how much money you could release from your home.


Things to consider with equity release

  • Equity release may involve a lifetime mortgage, which is a loan secured against your home.

  • Equity release will reduce your estate’s value and may affect your entitlement to means-tested benefits

  • A lifetime mortgage may result in limited or no property equity remaining and will reduce your financial options in the future

  • The loan, plus compound interest, is typically repaid through the sale of the property when the last remaining applicant passes away or moves into long-term care

  • Unless you decide to go ahead with a plan, our service is completely free of charge, as our fixed equity release advice fee of £1,799 is only payable on completion of a plan