Homeowners with equity release plans are being urged to check whether moving to a different deal could save them money over the long term, with interest rates currently close to all-time lows.
Just as you are able to remortgage your home in the traditional mortgage market, you can switch to another equity release provider’s deal to benefit from lower interest charges, alongside potentially more flexible features.
According to financial website Moneyfacts.co.uk, average rates for a lifetime mortgage, which is the most popular type of equity release scheme, are currently around 4.17%, compared to average rates of more than 5% five years ago. There are several plans with rates below 4% available, and some of the best deals currently stand at about 2.8%. However, with growing speculation that interest rates could rise sooner rather than later, the most competitive deals might not be around for long.
Jim Boyd, CEO of the Equity Release Council, says: “Today’s low interest rates and varied product range provide more options for existing customers seeking to switch to another plan. Specialist advice can identify whether existing customers can ‘rebroke’ their plan and if they can benefit from doing so. It is important to weigh up a range of factors as part of this decision, as the most suitable option might not necessarily have the lowest rate.”
If you’re a homeowner aged 55 or older, you can use equity release to access money tied up in your property, without having to sell it. The loan is eventually repaid when the property is sold, you pass away, or go into care. However, this type of scheme won’t be right for everyone, as it will affect the amount of inheritance you’re able to leave and may affect your entitlement to means-tested benefits. Find out more about some of the pros and cons in our guide Equity release – what is it and how does it work?