Choices increase and costs decrease for older borrowers

The Equity Release Council have recently published their Spring 2021 Market Report which brings some welcome news for homeowners over the age of 55.

The report shows that the mortgage choices available to older homeowners increased dramatically during 2020. In the second half of 2020, there were 488 equity release products and over 100 Retirement Interest Only (RIO) mortgage products available on the market. This represents an increase in product choice of over 20% compared with 2019.

In addition, the majority of products now include a range of flexible options, including:

• Future access to additional funds through a drawdown facility

• The ability to make regular interest payments or overpayments without an early repayment charge, allowing borrowers more control than ever before

• Portability and downsizing protection, allowing borrowers to move home easily and without early repayment charges

2020 also saw costs associated with Later Life finance decrease, making borrowing for older homeowners the cheapest it has ever been. The Later Life Finance team at Knight Frank Finance secured an average rate of 2.99% for our Lifetime Mortgage customers throughout 2020, and 2021 has started well with an average rate of just 2.77% for our clients. According to the Council, the average Lifetime Mortgage rate across the market was 3.95%, more than half a percent lower than in January 2020. Most lenders now offer a free valuation, low or no arrangement fees and an increase in products offering cashbacks, all of which has made other initial costs, such as solicitors fees, more affordable.

David Forsdyke, our Later Life Finance expert, warns rates may increase during 2021; “Lifetime Mortgage rates tend to move in line with the longer term fixed interest markets, such as the 15 year Gilt Yields, which have been rising recently as the economy starts to recover from the pandemic. Providers are already indicating their pricing will increase, and market leading rates have already risen by around 0.5% since the start of this year. Older homeowners considering a Lifetime Mortgage should act quickly in order to secure the best rates possible” says David.

If you would like to know more about Equity Release, RIO mortgages or other forms of Later Life Finance, please get in touch with David by email david.forsdyke@knightfrankfinance.com or by calling 01483 947764.