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Author: Carl Shave-Director
Updated on February 15th, 2024

How to get the best Equity Release interest rates

The Equity Release plan with the lowest rate might not actually be the best deal for you. Interest rates on these loans are usually fixed or sometimes capped. However, if you browse the market, you’ll notice quite a difference in rates between various providers and schemes.

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What are the best interest rates for Equity Release?

Typical Equity Release interest rates can range anywhere between 5% and 6.5%.

However, there is not a ‘best’ Equity Release rate to aim for or for a lender to use. This is because each application is different, and everyone will be suited to different lenders.

So, someone else getting a favourable rate doesn’t necessarily mean that you will, too. Furthermore, the product they get may not suit your personal circumstances. This is a key thing to remember when looking for any type of mortgage deal.

Though might think that a deal with a lower rate should be the one to go for, you’ll find that each product has conditions and benefits that affect how much you pay in the long run.

Will the lower rate deal really give the best value for money? And will your property even be eligible?

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Check your eligibility in minutes by completing our Equity Release mortgage calculator


What to look for with Equity Release interest rates in the UK?

As with many cheaper products, Equity Release schemes with low rates don’t offer many additional benefits. However, you’ll notice that as the interest rate rises, the providers will offer more incentives to take the loan. These could be things like:

  • Free property valuation
  • Free or very low application fees
  • Cashback option – sometimes 2%
  • Downsizing protection
  • Inheritance protection
  • Medical underwriting option

Depending on how long you think the loan will last, a higher interest rate product might turn out to be better. A 6.24% rate may sound a bit steep, but what if the lender guarantees a higher value-to-loan ratio? As well as a favourable drawdown period?

Each of the added extras below could change how you think about a prospective deal and save you money.

Other incentives that might influence your decision

Repayment options

Equity Release providers used to impose strict repayment charges. Now, however, many have responded to customer needs and are more flexible.

There are ways to have more control over your loan, and how much remains payable when it is due. If you find the right lender, some will let you pay back 10% annually without a penalty.

More favourable repayment charges

Furthermore, regarding early repayment, many higher interest schemes feature a simple fixed repayment charge. Some will only charge you a certain percentage during certain time periods.

For example, they might impose a 5% charge to repay the loan within the first five years. This will then change to 3% during the following three years and no charge thereafter. This means if you wanted to repay the loan after 8 years, you could do so without charge, instead of being locked in.

Lower withdrawal increments

If you want to take out sums in smaller stages, then you might want to go for a deal with a higher rate. Remember, with ‘drawdown’ schemes, you only pay interest on the amount you withdraw.

This is a case of the provider striking a balance. Many drawdown schemes with a low interest rate will stipulate a high minimum withdrawal, so you would, perhaps, take larger sums less often.

Some schemes with a higher interest rate will allow you to take as little as £2,000 at a time. This could help you stay under a savings limit to remain eligible for means-tested benefits.

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What influences the availability of favourable Equity Release interest rates?

The availability of favourable interest rates for Equity Release will vary according to:

  • The size of the loan
  • The value of your house
  • Your location (in some cases)

If you want to discuss your Equity Release plans, reach out today. Our team of expert advisers can answer all your questions during a free no-obligation consultation.

How is Equity Release interest paid back?

When choosing an Equity Release plan, it’s up to you to decide how it is done. If you decide to not make any payments in your lifetime, it will accumulate over time. Then, once you pass away or enter care, the sale of your property will typically cover the costs.

On the other hand, you can choose to pay back both the loan amount and the interest in your lifetime. This option will help you keep the final repayment cost lower. Lenders can be flexible with payment options. Some will allow you to repay monthly or make contributions as and when you want to.

How much will Equity Release cost?

Each individual will pay a different amount as there are a variety of factors that influence your costs. This could be the solicitor or broker you use, or the type of lender you select.

To give you a rough idea, according to the MoneySavingExpert, Equity Release may cost you anywhere from £1,500 to £3,000. This only includes the fees, however – not any interest that builds up over time.

Providing an idea of what interest rate costs you will pay can be difficult. This is because everyone borrows different amounts and obtains different deals.

However, we can give you an example. If you borrowed £25,000 aged 60 at 6%, the amount you owe doubles approximately every 12 years. So, once you are 72, you will approximately £50,000, and at 84 you owe approximately £100,000.

Making your Equity Release decision easier

There are numerous Equity Release schemes on the market. Therefore, trying to find the one that matches your needs can be a confusing and exhausting task. This is why it’s worth approaching an Equity Release broker to get them to help you.

As well as being experts on lenders and schemes, they also can access exclusive deals that don’t feature on a lender’s website, saving you money in the long run.

Which options we think could suit you will depend on how much you need, and what period of time it will be spread over. Knowing how you want to use your money, and when, is also key to understanding how interest rates will affect you.

As members of the Equity Release Council, our priority is to put your interests first. Reach out today and begin your Equity Release journey.

Frequently asked questions

  • What costs are involved with Equity Release?
  • Is Equity Release taxed?
  • What is a drawdown scheme?

There are a variety of costs involved when looking to take out an Equity Release plan:

  • Valuation fees
  • Arrangement fees
  • Solicitors’ fees
  • Consultation fees (certain brokers offer these – we don’t!)
  • Interest rates

If you want a more detailed insight into the costs of Equity Release, you can read our in-depth guide.



The capital released from your property is not taxed, making it an effective way to raise capital. This is because it’s technically not income, and, as you’re borrowing, you don’t pay capital gains tax.

Are you looking to release equity from your property? Reach out today and we will pair you with one of our expert advisers. They can answer any questions you have during a free no-obligation consultation.

A drawdown scheme is where you are able to draw upon funds as and when needed. Typically, a pre approved facility is agreed that you are then free to drawdown against. Compound interest is then only applied on the amount drawn.

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