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Equity release interest rate war has started between lifetime mortgage companies. We currently see week after week, the major equity companies such as Aviva, Just Retirement & LV= all vying for pole position. But how low can equity release interest rates go? In conjunction with interest rates being so low, investments remain sluggish & many people who had retired on a nest egg are starting to feel the pinch. The crisis seems far from over so it might be time to consider other options for “topping up” income that they create with a home equity release scheme. Equity release interest rates have been marginally lower than today’s 6.2% exclusive rate the one of the main equity release advisory firms – Equity Release Supermarket currently obtain from Just Retirement. Mark Gregory, founder & director feels that rates can go even lower during 2012 with possible new entrants pushing the established lifetime mortgage lenders even further. The day of the sub 6% equity release schemes are not too far away & if breached could see a greater interest in this pensioner mortgage. So what better time than now? Equity release schemes are more flexible than ever with drawdown schemes becoming the popular choice of the UK retired mainstream. Interest rates are being chipped away at, & with rates being fixed for life, now is as good a time as any to lock into a lifetime fixed rate mortgage. Most home equity release plans come in many forms but the most common one is the lifetime mortgage. This style of equity release mortgage is only available to those over the age of 55, as they include special features for elderly and retired people. These home equity release plans are designed to be put on properties which have had most or the entire mortgage paid off. It is essentially a re-mortgage, but with special consideration taken to what stage of life the homeowner is at. Home equity release schemes are a great way of topping-up emergency savings, as they can be arranged to either provide an additional amount of “income”, by slowly releasing the equity from a home in a controlled manner. Otherwise, they can provide a lump sum of cash which can provide capital that can be used for lifestyle purposes. This could be that extra cash for shopping, paying the bills or dining out with friends & family that has previously been difficult as the pennies had to be watched. This isn’t turning someone into having a frivolous nature but just enjoying the ‘finer’ things in life a bit more. What are the benefits of equity release schemes? The benefits of equity release schemes are that they are carefully packaged & today’s schemes are offered on favourable terms & provide good value for money. For example, for those looking for a home equity release mortgage that has little additional financial burden from day-to-day, the mortgage can be arranged so that the additional cost of interest is taken from the equity in the home. This means that the burden is shifted to the inheritance estate, or to when the home is sold when the policy holders are in care or downgrade their home. In each of these cases, it is likely that the market will be more buoyant and the home will have more value anyway. With savings taking such a beating due to low interest rates and pensions being punished so hard by this crisis, many retired people are struggling with managing their household finances. Sometimes products like home equity release schemes can help and provide some extra comfort and peace of mind. They can top-up the incomes provided through savings or pensions, and are usually available on terms which are agreeable and better than equity release schemes of yesteryear.
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