Range of equity release rates
Equity release can be a resourceful way of financing a healthy retirement but pensioners are warned to be wary of the current spread of interest rates in the market, according to new research.
Homeowners planning to cash in on their property in old age risk paying an extra £1,600 a year interest on lifetime mortgages, claims MoneyExpert.com.
The independent price comparison company has launched a new consumer service for lifetime mortgage products which analyses a range of 48 types from 18 providers.
Research revealed a great discrepancy in the APR between providers ranging from a low 5.7 per cent to a much higher 8.9 per cent – someone releasing £50,000 from their home would pay annual interest of £4,450 at 8.9 per cent compared with £2,850 at 5.7 per cent
"Equity release is a booming market with more than £1 billion in cash released from retired people's homes last year. Clearly it is an important and growing source of finance for the UK's retired homeowners," said Sean Gardner, MoneyExpert.com's chief executive.
"The difference in interest rates reveals there are real financial consequences from the choice you make. Customers should do their research so they are aware of the types of products available to them and the range of rates."
Some of the lowest rates can be found at Holmesdale Building Society (5.7 per cent), Age Concern and Chorley & District Building Society (5.9 per cent) and GE Life (6 per cent).
Rates can vary depending on how much is being borrowed and on how much of the value of the home is set against the mortgage.
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