If you’ve been researching equity release products we’re sure you will have noticed there is a wide range in interest rates right now.
Figures have shown that the average rate on equity release mortgages is now at a six-year high. This can be attributed to the fact that the Bank of England has raised the base rate of interest five times since December 2021 and it now stands at 1.25%. The financial information and comparison service Moneyfacts states that the typical rate for an equity release mortgage is now 5.63%, the highest it has been since August 2016.
Is equity release still a good idea right now?
There are more equity release products available than ever before which means a qualified advisor will be able to find the right one for you.
If you’re in debt, struggling to pay your monthly bills or want to do home improvements a lifetime mortgage will give you access to tax-free cash which you can use for this. Or perhaps you have family members who are struggling with the cost of living right now and you want to give them some financial help.
If this sounds familiar to your circumstances, a lifetime mortgage might be the answer. It will mean you don’t need to tap into your pension fund earlier than you planned. The most popular type of lifetime mortgage being applied for right now is a drawdown mortgage which allows you to take out money in small instalments, as and when you need it.
Another reason why lifetime mortgages are so popular is because it’s possible to make monthly interest repayments instead of allowing the interest to roll-up over time. This will reduce the amount your family or friends have to pay when you die or go into long-term residential care and the plan comes to an end and they have to sell your house.
If you’re finding that your equity release product no longer has a competitive interest rate it is possible to switch lenders to one which will save you money. A qualified equity release advisor will be able to advise you on whether switching is the right move for you. But it’s worth remembering that you may have to pay additional fees.
Remember that interest rates for equity release are higher than for regular mortgages because of the increased risk for lenders.
With house prices in many parts of the country still increasing, your property is likely to be the biggest asset you own. Releasing cash from your home is a safe and effective way of improving your finances and quality of life whether you’re just entering retirement or entering the later stages of life.
:: Use our Equity Release Calculator to work out how much cash you could release.
It is important to take expert advice on equity release before deciding whether it is right for you. Contact us to find out more from one of our highly trained advisors.