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Equity Release Rates are More Competitive than Ever Before

Compare Equity Release

Last updated on 27 June 2023

It has taken some time for equity release interest rates to mirror the reduction in conventional mortgage interest rates offered by the banks & building societies. You may be forgiven thinking the two rates are directly related. They are not.

In fact the movement in the lifetime mortgage market is usually more down to the competitiveness of the providers; particularly AVIVA, Just Retirement & LV= The knock on effect of these reductions has been a surge of consumer interest in UK equity release schemes during 2012.

What Factors Affect Lifetime Mortgage Interest Rates?

The inspired competitiveness from the providers is a result in the fall of longer term interest rates on the open markets. Long term swap rates had reached a level where lifetime mortgage providers feel is justified in passing on these reductions. Lenders borrow their funds in different ways. Companies using government gilts as their early repayment charge as their calculator have also been able to pass on these rate savings.

With companies like Stonehaven using the 15 year FT-SE gilt index as their repayment penalty format, their latest tranche of borrowings are at an all time low of 2.82%. This could be great news for equity release applicants looking for possible early repayment with no penalties in the future.

The Financial Benefit to Homeowners

The idea that homeowners can free-up some equity by way of equity release lifetime mortgages is enticing. The surplus of cash can be used to pay off debts and loans, as well as be used to help the children. Many homeowners even choose to carry out home improvements including having the kitchen or hardwood floors they always wanted but could never afford. These lifestyle enhancements have created an increase in demand for equity release plans, in turn increasing the competitiveness of equity release interest rates.

What are the lowest equity release interest rates currently?

A lot of different firms are currently offering attractive equity release interest rates, but believe it or not they are harder to find than you would think. It is always best advice to speak to an independent equity release adviser. They know the market best. As they are whole of market advisers & can deal with all the lifetime mortgage schemes currently available, they will be able to source the best interest rates. If you’re serious about equity release plans, don’t tackle the job all by yourself, you could be missing out on a great opportunity.

AVIVA provide the lowest equity release interest at the end of the first quarter of 2012, with a market leading 5.92% on their drawdown lifetime mortgage. Couple this with AVIVA’s free valuation upto £1million and £500 cashback, it represents an excellent deal.

If you’re searching the Internet for the best equity release interest rates you should be aware of two facts. Equity plans can often involve more aspects than meets the eye. Failure to understand a specific part of the plan could mean the difference between actually locking into a good rate, or being deceived into believing you got the best deal.

The lowest interest rate isn’t always best advice for everyone. Dependent upon one’s needs will determine the type of scheme suitable. With an array of equity release plans available such as home reversion, drawdown equity release & enhanced lifetime mortgage’s the decision can be daunting. Hence, the reason most equity release providers will insist on you receiving independent financial advice before they will accept any application.

Secondly, any potential consumer should be aware that some rates are not offered publicly over the Internet. An expert equity release professional will be able to offer customised equity release interest rates depending on your specific situation. Brokers such as Compare Equity Release have access to special deals that most financial advisers would not be privy to.

Additionally, by going direct to certain providers such as AVIVA may not always be the best option. Having a direct sales force costs a great deal of expense. Company car, pension scheme, sickness benefits & a basic salary has all to be paid for by AVIVA. As none of these costs are incurred by them with independent equity release advisers means that these savings can be passed on in a lower interest rate & cashback deals.

However, certain specification such as home value, the type of equity release plan, and your age all factor into the possible interest rate a consumer is eventually offered. For this reason, we always recommend seeking the advice of a professional. Equity release plans are not as simple as they always appear on the surface. Before you sign away the children’s inheritance, you want to understand all the aspects of the relevant plan.

With that being said, many experts agree equity release interest rates are being offered at great rates. Many professionals on the subject are advising to take advantage of these competitive rates while they still exist. As with any equity release schemes, there are risks. It’s imperative, in your consultation that all of the possible risks are fully outlined to you & the alternatives considered.

If you are interested in freeing up some capital to use for whatever you like, take a closer look at equity release lifetime mortgages. The first step is conducting your own independent research on the Internet. The second is speaking with a certified professional. They are Compare Equity Release and looking forward to discussing & help you find the best equity release deal for you.

Compare Equity Release can be contacted on 0800 028 3142 or by completing their online enquiry form.