Equity Release Interest Rates

If you are considering an equity release, the interest rates of the agreement along with a number of other factors should always be carefully considered, as these agreements are often irreversible. Generally speaking, these arrangements are usually best suited to older customers who have paid off their mortgage, and are looking for an alternative source of income.

 

When a customer takes out an equity release policy on their property, they essentially use their property as security in exchange for the money that they will receive, although the exact way this is handled will vary depending on the type of agreement.

 

The interest rates for different equity release deals will of course vary depending on the circumstances in question. However generally speaking, the longer the agreement lasts, the more that customers will be expected to pay in the long run.

Equity Release Advice 

 

 Although the cost of paying for these interest rates may increase over time, it should be remembered that an increase in house prices may help to offset the cost of repayments to a degree. Repayments will also be handled slightly differently depending on the type of agreement that is selected. Here is a brief explanation of each type of agreement:

 

Lifetime Mortgages
Using a lifetime mortgage, the customer takes out a loan and uses the value of their house as security for the loan. After they have passed on, their home is sold, and a portion of their estate will be used to cover the cost of the loan, plus interest.

 

Home Reversion Plans
Home reversion plans are slightly different, using this type of agreement, a percentage of the policy holders home is sold to the provider. In exchange, the customer may be given a lump sum or a regular income, depending on the type of deal. 

 

Much like a lifetime mortgage, the customer’s home will be sold at the end of the agreement with a portion of their estate going to the provider to cover the interest on the loan.

 

If you are searching for a quote on an equity release, it is important to carefully consider which type of agreement you will be best suited to. For more information on these agreements and a competitive equity release quote, please follow the link below.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. Equity release may affect your entitlement to state benefits and will reduce the value of your estate. It may involve a lifetime mortgage or home reversion plan. All content set out in this website is provided for information only and should not be considered as advice. It is strongly recommended that you seek advice of a qualified, independent financial advisor before making any decisions to take out an equity release product.