According to Defaqto the lowest interest rate today is 2.85% from more2life.
Equity release products are being offered at record low interest rates to tempt older borrowers, consumer finance experts Defaqto has found.
The lowest interest rate available today is 2.84% from more2life at age 65.
Rates have decreased in the past 18 months, with the average interest rate offered being 5.4% for customers aged 65 compared to 4.55% today.
Interest rates for Retirement Interest Only (RIO) mortgages have also dropped, with the lowest available rate being 2.79% from Marsden Building Society.
Brian Brown, consumer finance expert at Defaqto, said: “For those in later life who own their own home but need cash, borrowing money is not easy.
“Most standard loans and credit deals are not available to pensioners, leaving them with little choice but to release equity from their home.
“Equity release has been criticised for being expensive and inflexible in the past, but with historically low rates and portable loans, they are a much more viable option for some borrowers.
“Downsizing to a smaller or cheaper property may be a better option if you are able to move. That way you can free up cash from the sale to enjoy without paying interest.
“This though is not always a practical option and many people simply do not want to leave a home they lived in for many years.
“Releasing equity from your home is a big decision with ramifications for the rest of your life; you should take advice from an independent and qualified professional before making any decisions.
“Choose a reputable provider that is a member of the Equity Release Council.
“All Defaqto 5-star rated products are from members of the ERC, have a no-negative-equity guarantee and allow you to port the loan to a new property, should you wish to move.”
At current interest rates, the RIO option costs less over the long-term although there are a number of considerations.
The borrower would need to pay £133 per month and the interest rate is not guaranteed beyond the fixed period and could well rise over time.
The lender may expect repayment at the end of the agreed term, meaning the borrower might still have to sell their home in the future or take out equity release.
