If you are looking for a way to access some of the value in your home without having to sell it, you might be interested in equity release. Equity release is a type of loan that lets you borrow money against the value of your property and pay it back when you die or move into long-term care.
In this article, we are going to discuss all about “equity release interest rates” and more related concepts. Let’s start by discussing types of equity release products:
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What are the types of equity release products
There are two main types of equity release products: lifetime mortgages and home reversion plans. Here is the explanation:
- Lifetime mortgages are the most popular type of equity release. They allow you to keep ownership of your home and choose how much money you want to release, either as a lump sum or as regular income. You can also choose whether to pay interest on the loan or let it roll up and add to the debt. The loan and interest are repaid when your home is sold.
- Home reversion plans are less common than lifetime mortgages. They involve selling part or all of your home to a provider in exchange for a lump sum or regular income. You can stay in your home as a tenant, but you will no longer own it. The provider will get their share of the sale proceeds when your home is sold.
Best equity release interest rates providers in the UK
Equity release can be useful to boost your income or fund your retirement plans, but it is only suitable for some. It can reduce the value of your estate and affect your eligibility for means-tested benefits. It can also be expensive and complicated, so you should always seek professional advice before buying an equity-release product.
To help you compare different equity release options, we have compiled a list of some of the best equity release providers in the UK based on their rates, features and customer reviews. These are:
- Aviva: Aviva is one of the longest-serving and largest equity release providers in the UK, with over 20 years of experience and more than 200,000 customers. Aviva offers flexible lifetime mortgages with competitive rates, optional inheritance protection and no early repayment charges in some circumstances.
- Legal & General: Legal & General is another leading equity release provider, with over £3 billion lent since 2015. Legal & General offers lifetime mortgages with fixed or variable rates, cashback options, and downsizing protection. It also has a range of Retirement interest-only (RIO) mortgages for older borrowers who can afford to pay interest on their loans.
- More2Life: More2Life is a specialist equity release provider that focuses on innovation and customer service. More2Life offers lifetime mortgages with low rates, high loan-to-value ratios, drawdown facilities and partial repayments. More2Life also has a lifetime mortgage calculator that lets you compare different plans and scenarios.
- LV=: LV= is a mutual society that offers equity-release products for its members. It also offers lifetime mortgages with low rates, flexible features, and no application fees. LV also has a lifetime mortgage calculator that shows you how much you could borrow and how much interest you would pay.
- OneFamily: OneFamily is a mutual society that offers equity release products for its members. It also offers lifetime mortgages with fixed or variable rates, inheritance protection, voluntary payments, and cashback options. OneFamily also has a lifetime mortgage calculator that shows you how much you could borrow and how much interest you would pay.
- Hodge Lifetime: Hodge Lifetime is a specialist equity release provider that has been in the market since 1965. Hodge Lifetime offers lifetime mortgages with low rates, flexible features and downsizing protection. Hodge Lifetime also has a range of RIO mortgages for older borrowers who can afford to pay interest on their loans.
- Canada Life: Canada Life is an international financial services company that entered the UK equity release market in 2018 through the acquisition of Retirement Advantage. Canada Life offers lifetime mortgages with competitive rates, optional inheritance protection and cashback options.
These are just some of the best equity release providers in the UK, but others may suit your needs better. You should always compare different providers and plans before deciding and seek independent advice from a qualified equity release adviser.
The best equity release interest rates
| Product | Provider | Interest rate | Incentives |
| Horizon 240 | Standard Life Home Finance | 5.94% AER | Free application and free valuation |
| Classic Super Lite | Pure Retirement | 6.10% AER | Free application and free valuation |
| Flexi Choice Super Lite | More2Life | 6.10% AER | Free application and free valuation |
| Flexible Opal | Legal & General | 6.18% AER | Free application and free valuation |
| Capital Choice Ultra Lite 1 | More2Life | 6.12% AER | Free application and free valuation |
| Classic Drawdown Lite | Pure Retirement | 6.42% AER | Free application and free valuation |
| Horizon 300 (fee-free) | Standard Life Home Finance | 6.27% AER | Free application and free valuation |
| Flexible Carbon | Legal & General | 6.32% AER | Free application and free valuation |
| Drawdown+ Lite | LV= | 6.27% AER | Free application and free valuation |
Some Questions
What Determines Equity Release Interest Rates?
Equity release interest rates are influenced by the trend of 15-year gilts, rather than the Bank of England base rate. Gilts are UK government bonds used to finance public spending.
Does the Interest Rate Matter?
Yes, the interest rate is crucial. It determines the applied interest and impacts the amount passed on to beneficiaries when the plan ends.
What is the Current Lowest Equity Release Rate (as of January 23rd, 2024)?
The lowest equity release interest rates currently stands at 5.23%1.
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