What Are the Best Lifetime Mortgage Interest Rates in 2024?

Interest rates for lifetime mortgages vary by provider and market conditions, emphasizing the importance of research and comparison to secure a competitive rate that suits your financial situation.
  • Last Updated: 11 Jun 2024
  • Fact Checked Fact Checked
  • Our team recently fact checked this article for accuracy. However, things do change, so please do your own research.

Contributors:

Francis Hui
Are You Looking for the Best Lifetime Mortgage Interest Rate? Find Out What Affects the Interest Rate Charged and the Difference Between Variable and Fixed Interest Rates. Read On...
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Key Takeaways…

  • Lifetime mortgage rates in the UK shift with the lender you pick, usually ending up steeper than regular mortgage rates because lenders wait for repayment until the property is sold.
  • You’ll find both fixed and variable rates depending on the chosen plan, and your age, home value, how much you borrow, and the economy play big roles in setting your rate.
  • Watch out: Higher rates mean faster debt growth, which can impact the home’s equity over time.

The best lifetime mortgage interest rates in 2024 vary by lender, reflecting market conditions and individual borrower circumstances, with a steady drop from relatively high levels until early 2022 when they started rising again slowly.

Despite recent increases, average rates are still lower than the average highs seen in 2016.1

Now may be a good time to speak to an advisor about a lifetime mortgage, because there remains the potential for further Base Rate rises.

In This Article, You Will Discover:

    The team at Every Investor takes pride in keeping abreast of the most recently available lifetime mortgage rates from certified lenders.

    Rates currently range from 5.25% to 6.30%*. View the equity release interest rates here. *Whilst we regularly review our rates, these may have changed since our last update.

    Therefore…

    Who Offers the Lowest Rates in 2024?

    Discover the Lowest Rates & Save

    Request a FREE call back & discover:

    • Who offers the LOWEST rates available on the market.
    • Who offers the HIGHEST release amount.
    • If you qualify for equity release.
    Best Lifetime Mortgage Interest Rates

    What Is a Lifetime Mortgage, and How Are Interest Rates Determined?

    A lifetime mortgage is a loan secured against your home, with interest rates determined by lender criteria and market conditions.

    What Defines A Lifetime Mortgage?

    A lifetime mortgage is defined as a loan secured against your home, specifically designed for those over the age of 55, that allows you to release a portion of your home’s value as cash while still owning it.

    Unique to this mortgage is the option to make no monthly repayments. The loan, plus accrued interest, is typically repaid from your estate when you pass away or move into long-term care.

    How Is Interest Calculated for Lifetime Mortgages?

    Interest on a lifetime mortgage is usually calculated based on a fixed interest rate agreed to when your provider makes an offer. While, variable rates are also available, they will be capped, and interest is calculated and charged on a compound basis.

    This means that interest is calculated on the initial loan amount plus any interest accruing on the initial capital sum.

    In other words

    You will be accruing interest on interest if you choose not to make monthly interest payments.

    The equity release rates offered by various financial institutions can vary significantly based on individual circumstances.

    What Are the Current Interest Rates for Lifetime Mortgages in the UK?

    Current interest rates for lifetime mortgages in the UK vary, reflecting the economic climate and lender competition.

    What Are the Current Lifetime Mortgage Interest Rates in the UK?

    Current interest rates for lifetime mortgages in the UK range from 5.25% to 6.30%*, depending on the provider and the specific terms of the mortgage.

    We have observed that the average rate is approximately 6.1%, although this value may fluctuate due to factors such as the Bank of England base rate, economic climate, and lender competition.

    The interest rate chosen will significantly impact the total amount payable over the life of the mortgage.

    Opting for a lifetime mortgage with a fixed interest rate can offer reassurance, as payments remain constant regardless of changes in the market. Conversely, a variable rate could potentially reduce costs, but it also carries the risk of rate increases. Remember, it is essential to seek expert advice before committing to a lifetime mortgage.

    What Is the Average Interest Rate for Lifetime Mortgages?

    The current average interest rate on lifetime mortgages can be expected to be approximately between 5.25% to 6.30%*.

    The rate you are offered will depend on different factors, such as your loan-to-value ratio and the features included in your plan.

    *Whilst we regularly review our rates, these may have changed since our last update.

    How Do Lifetime Mortgage Rates Compare to Other Equity Release Products in 2024?

    In 2024, lifetime mortgage rates often offer competitive options compared to other equity release products, depending on the borrower’s needs and market trends.

    What Are the Current Equity Release Interest Rates in 2024?

    Current equity release interest rates in 2024 are influenced by market trends and lender policies, offering a range of options for homeowners seeking to unlock their property’s value.

    Generally, you can expect rates to vary widely based on the lender and the specific product features, with some of the best deals hovering around competitive benchmarks.

    Always check with multiple providers to find the most favourable rates tailored to your financial situation.

    How Do Equity Release Mortgage Rates Compare to Lifetime Mortgage Rates?

    Equity release mortgage rates and lifetime mortgage rates often vary, with the latter typically offering fixed rates that provide stability and predictability for long-term financial planning.

    Each of these rates often align closely, but differences can emerge based on product features and lender policies.

    Equity release, encompassing both lifetime mortgages and home reversion plans, typically offers rates slightly higher due to the added flexibility and no required repayments.

    However, lifetime mortgages, especially those that allow for interest payments, may offer more competitive rates to reflect the reduced risk to the lender.

    Fixed Rates on Lifetime Mortgages

    Rates on lifetime mortgages are often fixed, meaning that they are set at the beginning of the loan and remain the same for the duration of the loan period. This means you will not experience the effects of interest rate changes with a fixed-rate equity release plan.

    Variable Rates on Lifetime Mortgages

    Variable rates on lifetime mortgages adjust with market conditions, offering potential savings but also posing risks of increasing costs over the loan’s duration.

    However, it is an Equity Release Council requirement that variable rates on lifetime mortgages are capped, which means they will never exceed a predetermined level.

    How Are Interest Rates Calculated in Lifetime Mortgages? Understanding AER vs. MER

    Interest rates in lifetime mortgages are calculated using the AER (Annual Equivalent Rate) for overall costs and the MER (Monthly Equivalent Rate) for monthly costs.

    AER vs. MER: How Do They Differ in Lifetime Mortgages?

    In lifetime mortgages, AER and MER differ in their calculation; AER reflects the yearly interest cost, while MER includes compound interest, offering a more accurate cost over time.

    How Do Interest Rates Vary Across Different Types of Lifetime Mortgages?

    Interest rates across different types of lifetime mortgages vary based on the loan’s features, borrower’s age, and property value, reflecting the diverse financial solutions available to homeowners.

    Current types of lifetime mortgages include lump-sum lifetime mortgages, drawdown mortgages, flexible or voluntary payment options, interest-only mortgages, and capital and interest mortgages.

    Lump-Sum Mortgages

    With a lump-sum mortgage, you receive a lump-sum loan on which interest is payable.

    The interest will accrue (or compound) if you do not make repayments, and these amounts will be added to the loan. The loan amount, including the rolled-up interest, will then be repaid when your home is sold.

    Drawdown Mortgages

    With a drawdown mortgage, you will be able to release funds when you need them, giving you more freedom than with a lump-sum plan. Releasing funds when you need them means you will save on interest, as interest will only accrue on sums released.

    Flexible or Voluntary Payment

    With a flexible or voluntary payment option, borrowers can choose to make voluntary payments to reduce the interest owed.

    Any payments are ad hoc and are not mandatory.

    Interest-Payment Lifetime Mortgage

    With an interest-payment lifetime mortgage, you can repay the interest monthly, preventing it from accruing and increasing the overall loan amount.

    This setup keeps the initial loan amount constant, offering a way to mitigate the impact of compound interest over time.

    It is an appealing option if you have a regular income and wish to preserve as much inheritance as possible for your beneficiaries.

    How Do Market Trends Influence Lifetime Mortgage Interest Rates?

    Market trends significantly influence lifetime mortgage interest rates by affecting lenders’ borrowing costs, with fluctuations reflecting economic conditions, central bank policies, and demand for these financial products.

    How Do Market Trends Affect Lifetime Mortgage Interest Rates?

    Market trends play a significant role in shaping interest rates for lifetime mortgages, with factors such as inflation, economic policies, and the Bank of England’s base rate influencing lenders’ offerings.

    During periods of economic stability, you may find rates more favourable, reflecting lower risk.

    Conversely, turbulent times can lead to higher rates as lenders aim to manage their risk exposure, making it crucial to stay informed on market conditions when considering a lifetime mortgage.

    What Are the Lowest Interest Rates for Lifetime Mortgages in 2024?

    The best rates you can achieve in 2024 start at circa 5.25% to 6.30%*, but ultimately depend on lender offers, market conditions, and individual borrower profiles, presenting various opportunities for homeowners to unlock equity at competitive rates.

    *Whilst we regularly review rates, these may have changed since our last update.

    Your adviser will discuss your options with you.

    An example of how your total debt could grow…

    Is It Possible to Achieve a 4% Interest Rate in 2024?

    YearLoan amountInterest at 4%Total owed*
    1£50,000£2,000£52,000
    2£52,000£2,080£54,080
    3£54,080£2,163£56,243
    4£56,243£2,249£58,492
    5£58,492£2,340£60,832
    10£71,165£2,847
    (£24,012)
    £74,012
    15£86,583£3,464
    (£40,047)
    £90,047
    20£105,342£4,371
    (£59,556)
    £109,556

    How Likely Are 5% Interest Rates for Lifetime Mortgages in 2024?

    YearLoan amountInterest at 5%Total owed*
    1£50,000£2,500£52,500
    2£52,500£2,625£55,125
    3£55,125£2,756£57,881
    4£57,881£2,894£60,775
    5£60,775£3,039£63,814
    10£77,766£3,878
    (£31,444)
    £81,444
    15£98,996£4,950
    (£53,946)
    £103,946
    20£126,347£6,317
    (£82,664)
    £132,664

    *This is for indicative purposes only.

    How Can You Calculate the Total Interest You Will Pay on a Lifetime Mortgage?

    To calculate the total interest on a lifetime mortgage, you will need to consider the initial loan amount, the interest rate, and how long you plan to have the mortgage.

    Most lenders provide calculators that can give you an estimated total, factoring in compound interest over the years.

    Remember, making voluntary payments can reduce the interest accrued, altering the total amount payable over the life of the mortgage.

    Frequently Asked Questions About Lifetime Mortgage Interest Rates

    Is It Possible to Pay Off a Lifetime Mortgage?

    What Costs Are Associated With a Lifetime Mortgage?

    How Can I Calculate the Interest I Will Pay on a Lifetime Mortgage?

    What Factors Affect the Interest Rate on Lifetime Mortgages?

    What Are the Current Lifetime Mortgage Interest Rates in the UK?

    How Do Lifetime Mortgage Interest Rates Compare to Regular Mortgage Rates?

    Can Lifetime Mortgage Interest Rates Change Over Time?

    What Factors Influence Lifetime Mortgage Interest Rates?

    How Do Lifetime Mortgage Interest Rates Affect the Equity in My Home?

    Concluding Insights on Lifetime Mortgage Interest Rates in 2024

    Find a retirement solution that suits your needs while lifetime mortgage rates are still relatively low in 2024.

    If you are considering a lifetime mortgage, consult an independent financial advisor who will be able to determine whether equity release is the ideal option for you.

    Speak to an experienced equity release adviser to discuss the lifetime mortgage interest rates you could qualify for.

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