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The equity release market has continued to evolve in recent years, with lenders competing not only on interest rates, but also by expanding the number of deals available to meet growing demand. Indeed, equity release lending is already at a record high as more and more people realise the benefits, and thanks to rising competition, now could be a great time to get on board!
Our latest research highlights the improving market for consumers, with the average fixed rate for a lifetime mortgage (or equity release) deal falling to a record low of 5.63%, a drop of 0.02% in the last month and a significant reduction of 0.70% year-on-year. At the same time, the number of fixed rate equity release options has grown dramatically, rising by 16 from this time a year ago and by a third in just two years, with today's total of 82 marking the highest level of availability seen in eight years.
This combination bodes incredibly well for homeowners, many of whom will have been able to benefit from years of rising house prices – those who are looking for a cash injection without needing to move home can now choose from a huge number of suitable products at the lowest ever rates, so there's never been a better time to consider this form of later life borrowing. Check out the table below to see how far the market has come in recent years, and make sure to get in touch if you want a more personalised overview.
|Average fixed lifetime mortgage rate||5.91%||6.33%||5.65%||5.63%|
|Number of fixed rate lifetime mortgage deals||52||66||78||82|
"The rise in product choice together with the fall in fixed rates will be exciting news for those who have equity locked up in their homes and are eager to make better use of the cash," said Rachel Springall, finance expert at Moneyfacts.co.uk. "New brands, more drawdown options and an influx of incentives have also appeared, all of which will appeal to a variety of customers."
But why might you be considering equity release? A lot of it will come down to your financial situation, as Rachel explains: "Consumers these days may well be facing a retirement shortfall or have failed to set aside enough cash for potential care fees, so an equity release deal could give them a vital sum to enable them to enjoy their later years much more comfortably.
"However, committing to an equity release deal shouldn't be taken lightly, and there will usually be fees to pay for advice, valuations and legal costs. Therefore, it would be wise for prospective borrowers to consult with their family members, particularly if they are concerned about leaving an inheritance, to make sure it's the right decision."
It's also important to be diligent when comparing equity release deals, as thanks to the increased level of choice, there's far more to think about and a lot more small print to read. As a result, seeking independent financial advice may prove vital, particularly as the lowest rate isn't always the best option when it comes to picking the right equity release plan.
"Consumers may well prioritise how much they can receive in a lump sum instead," added Rachel, "and this, coupled with differing eligibility criteria (such as a variety of minimum age requirements), means that the equity release minefield could be much easier to tread when armed with good independent advice."
This is why you shouldn't go it alone – start the process by finding out more about equity release and what it could mean for you and your family, and contact our no obligation advice service for a free, impartial chat about your options.
Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time. Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. Moneyfactscompare.co.uk will receive a small payment if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.