Property News

Avoid the equity release "sting" - 16/05/2006

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Consumers seeking equity release products such as lifetime mortgages could save up to £1,600 a year by shopping around, according to new data.

Price comparison website MoneyExpert has published research that states there is a large discrepancy between equity release providers on the market.

The average APR currently stands at 6.95 per cent, with products ranging from 5.7 per cent to 8.9 per cent.

Sean Gardner, chief executive of Money Expert, commented: "That spread of interest rates has a major effect on the amount of interest a homeowner will pay — someone releasing £50,000 from their home would pay annual interest of £4,450 at 8.9 per cent, compared with just £2,850 at 5.7 per cent and £3,477 at the average 6.95 per cent."

This could result in a difference of £1,600 between those paying the highest and lowest amounts of equity release.

Equity release has increased in popularity due to rising rates of property prices in the UK.

This has led to the situation where some people are income poor but property rich, allowing them to capitalise on the money wrapped up in their property.

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