More choice for older homeowners who want to unlock cash from their properties
Homeowners who want to unlock cash from their properties have a record number of equity release deals to choose from.
Over the past two years, the number of deals on offer has more than doubled from 58 in August 2016 to 139 in August 2018, according to the Equity Release Council.
Average interest rates have also fallen over the period from 5.76 per cent in 2016 to 5.09 per cent in August this year, figures from comparison website Moneyfacts have shown.
Over the past two years, the number of equity release deals on offer has more than doubled
Equity release mortgages allow homeowners aged 55 and over to release cash from their homes and the loans don’t have to be repaid until they die or go into care.
A total of 38,912 households unlocked some of their property wealth during the first half of 2018 — up 25 per cent from 31,158 in the first half of 2017.
Experts say the growing demand for equity release mortgages has encouraged lenders to offer borrowers more choice.
Last week, over-50s company Saga launched an equity release deal that pays homeowners a monthly income instead of a lump sum.
The borrower pays an annual interest rate of 5.65 per cent.
Early repayment charges of up to 20 per cent of the amount taken out will be charged if borrowers repay the loan early, so it is unsuitable for homeowners who want a short-term income boost.
Dean Mirfin, chief product officer at Key, says: ‘Saga’s product is the only one of its kind on the market and there will no doubt be plenty of borrowers who like the idea of getting their equity paid to them in monthly instalments rather than having to withdraw the money in a lump sum, where income is the real priority.’
Mr Mirfin says lenders have listened to older borrowers and introduced new flexible features to equity release deals.
‘For example, lots of lenders now offer borrowers the option to repay their loans penalty-free after five years if they are downsizing,’ he says.
The Mail, together with Key, has produced a free guide to equity release called Unlock The Cash From Your Home.
Order a free copy by calling 0808 208 4167 or visitingkeyadvice.co.uk/mail