The average equity release rate has dropped below 5% for the first time since 2007.
The current rate stands at 4.99%, which is down from 5.10% a year ago and 6.11% in 2014.
Prospective borrowers have more choice than ever before with the number of deals available rising to more than 200, up from 164 a year ago and just 48 in 2014.
For cash poor homeowners over 55, equity release can help you unlock the value of your property and turn it into a cash lump sum. You don’t need to have fully paid of your mortgage to be applicable. As a rule, you can take the money you release in one lump sum, in several small amounts on which you pay interest, or as a combination of both.
Rachel Springall, finance expert at Moneyfacts.co.uk, said “The equity release market has evolved considerably over the years, with choice increasing and rates reducing as a result – the market has become much more accommodating to prospective borrowers.
The Equity Release Council’s Spring 2019 report showed that borrowers are more inclined to choose to drawdown rather than taking a lump sum, with two-thirds (64%) of new customers opting for a drawdown lifetime mortgage in the second half of 2018.
Springall added: “By choosing a drawdown product, consumers could potentially save interest compared to taking a lump sum.
“The reasons why borrowers choose an equity release deal can vary. Whether it be to fund any gap for later life care costs, to reduce the blow of an Inheritance Tax bill, or just to make retirement more comfortable, it is vital consumers get independent financial advice to ensure it is right for them.”