Retirement Money News

Over the past four years the average equity release has fallen by 1.14% so that it is now on average cheaper to take out an equity release than it was in 2016. While this is good news for those currently considering releasing equity from their home, for those who took out an equity release plan some years ago it may be disappointing reading. Fortunately, there is the possibility of remortgaging equity release, which could result in a lower, cheaper rate. Below we take a look at whether now is a good time to remortgage your equity release.

Since 2016 the average equity release rate has fallen from 5.35% to stand at 4.21% today. As the below table shows, average equity release rates have been falling consistently year-on-year over the past four years. In addition to this, as we reported earlier this week, research from Key Partnership found that competition within the equity release market is increasing and this year has seen a new equity release product being launched every 28 hours.

The fall in rates combined with the increase in equity release competition means that those looking to remortgage equity release now are likely to get a better deal than if they did so just a few years ago. This could also mean that, depending on the rate of their initial equity release, they could be able to get a remortgage equity release deal that results in paying a lower rate. Additionally, with new products entering the market offering enhanced product features, those with an equity release could find that there are now more options that suit their personal circumstances than when they initially took out equity release.

Saying this, there are many factors to consider, and costs to be included, when looking to remortgage an equity release. For example, those with an equity release deal could find that they have to pay a significant amount of money to exit their existing deal and remortgage with a new equity release – the cost of this could outweigh the lower rates being offered on the new equity release deal.

Despite the numerous benefits equity release can offer it is important that independent financial advice is sought to ensure the costs and implications are understood fully. In addition to this, speaking to an equity release adviser may be a good option to help those looking to remortgage equity release to find the right deal for their circumstances.

Workers nearing retirement and looking for the income security provided by an annuity will be disappointed by our research which found that average annual annuity income has fallen by over £1,000 over the last decade.

“Those looking for a guaranteed income during their retirement may be considering an annuity, but over the years this market has contracted significantly and there are only a few providers left in the open market annuity area,” explains Rachel Springall, finance expert at Moneyfacts.co.uk. “As it stands, an annuity for a single life male aged 65 who has a £50,000 lump sum and takes out a level without guarantee annuity (standard or enhanced included) will receive an annual annuity income of £2,295 on average paid monthly in advance, but this is £1,080 less than the same time ten years ago.

As house prices continue to rise, combined with the withdrawal of many first-time buyer deals from the mortgage market, it is currently a very challenging environment for those looking to take their first step onto the property ladder. Grandparents with grandchildren struggling to get the deposit needed to secure a mortgage on their first home may be tempted to help out by releasing equity from their own home to pay towards the deposit.

Here we take a look at whether grandparents should consider releasing equity from their home to help pay for their grandchild’s house deposit.

The average rate for equity release dropped to 4.21% on 3 September 2020, only fractionally above the lowest ever average rate seen since 2007, at 4.13% in March 2020. Those wanting to release cash tax-free from their home to help fund retirement, home improvements or to pay off their mortgage can now do so at some of the most competitive rates ever seen. In addition, those with existing equity release could also potentially save thousands by switching to a new lower rate equity release deal. We explain more below.