How many equity release products are there? and what are the rates?
The number of equity release deals on the market has more than doubled in two years as lenders improve their propositions.
According to the data company Moneyfacts, there are currently 698 equity release deals, up from 480 in August 2020 and 383 in August 2019.
Moneyfacts states the average interest rate on new equity release loans increased from 4.13% in August last year to 4.32% at the start of this month. The provider also says the average maximum loan-to-value for equity release has risen to 50%.
Jed Newton, director and equity release specialist at Trinity Financial, says: “The average equity release rates vary massively depending on how much equity older borrowers have in their property. There are rates as high as 5% for those raising funds with the highest loan-to-values, reducing to 2.5% with the most equity.
“Equity release has increased in popularity as the products have got better. More older borrowers can make 10% overpayments and avoid one of the biggest pitfalls of equity release, which is the roll-up of interest. The average age of my equity release clients is 75, so they are typically between 65 and 85."
Why are older borrowers using equity release?
Jed highlights the main reasons borrowers use equity release and they include: repaying interest-only mortgages, gifting funds, providing access to cash for home improvements and supplementing a shortfall in retirement income.
He says it is safe to say there are going to be more people that need and want equity release in the future.
Contact Jed Newton at Trinity Financial on 020 7016 0790 to secure an equity release mortgage or book a consultation with him
This is a lifetime mortgage. To understand the features and risks, ask for a personalised illustration.
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