Equity release interest rates

When you speak to your adviser, they'll aim to find the right equity release plan for you with the lowest interest rate available. This will depend on your circumstances and the plan type you choose.

The interest is usually paid off with the rest of your equity release loan, either when you pass away or move into long-term care.

With a lifetime mortgage, interest is usually added in the first month. Then the following month's interest is added to your loan amount plus the previous month's interest. This carries on for as long as you have your loan.

Some equity release plans give you the option to pay off some or all of your interest, usually in monthly instalments. Your adviser can discuss this option with you in more detail.

To see examples and find out more about how equity release interest rates work, read our article How much does equity release cost?

Find out how much equity you have in your home

The average house is now worth three times more than in 2001.* That's exciting news if you're thinking about releasing equity, because the amount of money you could access depends on the value of your home (as well as your age).

For example, if you're 65 and your house is now worth £200,000, you could release up to £80,000. But if you're 75 with a home worth £200,000, you could release up to £100,000.

To find out how much equity you could release, call us for a free eligibility check. Our friendly team will ask some quick questions about you, your household and your property.

If you're eligible, you'll be put through to an equity release expert. They'll help you work out how much your home is worth and how much equity you could release.

Then, once you've chosen a plan, your equity release provider will give you a professional valuation of your property.

Deciding if equity release is right for you

If you're aged 55 years or older, and a UK homeowner with a property worth at least £70,000, you could release equity. But whether or not it's right for you will also depend largely on your personal circumstances. If you agree with the statements below, then it could be an option worth exploring.

You want to top up your income without monthly repayments

Releasing equity lets you access your cash tax-free, in one lump sum, or in smaller instalments. Generally, unlike most other forms of borrowing, you do not have to pay monthly repayments on your loan.

You want to stay in your own home

One of the main advantages of releasing equity is the right to stay in your own home. Your home will only be sold when you pass away or go into long term care.

You understand it will reduce the inheritance you leave behind

Equity release is designed to help you and your loved ones enjoy your money during your lifetime. The equity you release is paid back from the sale of your home, so there will be less money available for inheritance.

You want the freedom to spend your money however you like

Once you receive your cash, you’re free to spend the money how you wish. The only exception is if you have a balance left on your mortgage, in which case you’ll need to use some of the cash to pay it off.

Our customers have used the money they release for all sorts of things, including home and garden improvements, paying off debts, early inheritance for their family, or maintaining a comfortable lifestyle during retirement.

Remember, equity release isn't right for everyone. When you speak to one of our expert advisers, they'll explain everything step-by-step, so you can decide what the best option is for you.

Weighing up the pros and cons

Releasing equity isn’t right for everyone, so it's important to weigh up the pros and cons. Read our article to understand the common advantages and potential pitfalls.

When you speak to an adviser they'll walk you through all the pros and cons and what they mean for your personal situation. Here are some of the key considerations they'll discuss with you:

Important information

• You continue to own your house with a lifetime mortgage which is a debt secured against it. The value of equity released, plus accrued interest, is to be repaid upon death or moving into permanent long-term care.
• If you have an existing mortgage, you must use the money you release to pay it off first.

The different types of equity release schemes

Your equity release adviser will discuss different schemes and how they might work for your personal circumstances.

Lifetime mortgage – the most popular way to release equity

Access a lump sum, with no need for monthly repayments, and you’ll still own your own home.

Find out more about lifetime mortgages.

Drawdown lifetime mortgage

Release cash in instalments over time, and only pay interest on what you’ve taken.

Find out more about drawdown lifetime mortgages.

Interest-only lifetime mortgage

Release tax-free cash, and reduce interest by making repayments.

Find out more about interest-only lifetime mortgages.

Home reversion plan

You sell all or part of your home to access a lump sum and live there rent-free.

Find out more about home reversion.

What to expect when speaking to an adviser

An adviser will help you decide if releasing equity is right for you.

You can speak to them over the phone, through a video call, or face-to-face. They’ll explain all of the details and the options available. To help you get started, we've compiled a list of possible questions you can ask your adviser.

Why speak to an equity release adviser?

You have to get equity release advice before you apply, but it’s also a good first step. Here’s why:

They'll answer all your questions

You can ask your adviser anything about equity release.

If it’s not right for you, they’ll say so

The advisers are impartial, meaning they’ll advise against equity release if they don’t think it’s suitable for you.

They'll find you the best rate

An adviser will look at options from across the whole market and find you the best deal.

The best rate on the market, or £500 guaranteed

How to apply step-by-step

Applying for equity release isn’t a rushed process. There’s lots of advice and support along the way to make sure it’s right for you.

1. Call 0800 633 55 66 to make an appointment with an impartial financial adviser
   We’ll check your eligibility with a few quick questions, before putting you through to experts from our partner Age Lifetime. They are a member of the Equity Release Council, so will follow the Council's Statement of Principles for an added peace of mind.
2. Talk it through with your adviser
   You’ll discuss your circumstances, the options available and whether equity release is the right option for you. You can talk to your adviser as many times as you need.
3. Complete your application
   Your adviser will recommend the best plan for you and send you all the information. If you decide to go ahead, you’ll need to complete an application. Your adviser can help with this.
4. Get independent legal advice
   You’ll need to speak with a solicitor once you’ve returned your application. Your adviser can recommend suitable solicitors if you’d like them to.
5. Receive your money
   You’ll usually receive your cash lump sum or first instalment within 6 – 8 weeks of returning your application, but it could be sooner.

What happens if you need to repay your equity release loan early

Whether you can repay the equity you’ve borrowed early will depend on your plan provider. There are often early repayment fees, so it’s best to check with your provider and equity release adviser before making any decisions.

Selling your house after equity release

With many schemes you can still move home once you’ve released equity. Just be aware that certain conditions may apply and there may be fees to pay. Your adviser can discuss this with you in more detail.

If you're thinking about releasing equity and want to know more about what happens afterwards, it's best to speak to an expert adviser. Different plans and providers vary in how they approach the sale of your home and early repayments (if you want to make them). An adviser can take you through the plans that are best suited to you.

How your equity release loan will be repaid

There are a few options, depending on the type of plan you choose.

With a lifetime mortgage, the person who is in charge of your estate – perhaps your spouse or child – usually sells your home. Then the money made from the sale repays your equity release loan, including any outstanding interest.

If you don't leave your house to anyone in your will, or if you have a home reversion plan, your equity release provider will arrange everything instead.

The loan usually needs to be repaid within 6–12 months of your passing.

Your expert adviser will let you know what your options are right from the get-go. Just remember to keep your family in the loop, so they know what to expect when the time comes.