Equity release products are being offered at record low interest rates, according to new analysis by the consumer finance expert, Defaqto.
The lowest interest rate available on the equity release market, Defaqto found, is the 2.84% from more2life, at age 65.
The new research found that interest rates have plummeted in the last 18 months – with the average interest rate offered dropping from 5.4% for customers aged 65, compared to 4.55% at the beginning of 2020.
Furthermore, Retirement Interest Only (RIO) interest rates have also dropped, and the research revealed the lowest rate available is the 2.79% from Marsden Building Society.
RIO mortgages, however, are also secured against the borrower’s home, and Defaqto suggested independent financial advice should be taken before committing.
Defaqto consumer finance expert, Brian Brown, said: “For those in later life who own their own home but need cash, borrowing money is not easy. Most standard loans and credit deals are not available to pensioners, leaving them with little choice but to release equity from their home.
“Equity Release has been criticised for being expensive and inflexible in the past, but with historically low rates and portable loans, they are a much more viable option for some borrowers.
“Downsizing to a smaller or cheaper property may be a better option if you are able to move. That way you can free up cash from the sale to enjoy without paying interest. This though is not always a practical option and many people simply do not want to leave a home they lived in for many years.”
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