The best lifetime mortgage rates available during January 2021

For those aged 55 and over a lifetime mortgage can be a good way to release equity from their home without having to move house. Over the last few years there has been an increase in the number of lifetime mortgage plans entering the market, which has not only provided borrowers with more choice and flexibility, but during this time rates have also fallen. Those considering a lifetime mortgage should be aware that it could have a long-term impact on finances and, as such, they should consider speaking to an independent financial adviser to help them decide whether it is the best option for their individual circumstances. As well as this, for those who are planning to take out a lifetime mortgage plan speaking to an equity release broker could help them choose the best plan for their needs.

It should be noted that the plans we’ve highlighted are not endorsed by Moneyfacts.co.uk, but have instead been chosen because they offer the lowest rates listed by Moneyfacts for the scenario that we have selected. For more information about equity release, take a look at our equity release FAQs page.

* Partial repayments of up to 10% per annum are permitted without an early repayment charge applying.

Pure Retirement offered the most competitive lifetime mortgage rate on a plan that charged a fee from a minimum of 30% LTV on its Classic Lite Plus plan. This plan offers 2.56% AER (2.6% APR) and is available to those with a maximum 30.5% LTV at the age of 70. Properties must be valued at a minimum of £125,000 and it requires a minimum advance of £10,000 to a maximum of £1 million. This plan charges a fee of £500 and interest is not payable but partial repayments of up to 10% per annum are permitted without an early repayment charge being applied.

Two lifetime mortgage plans from Legal & General Home Finance offer a competitively low rate of 2.64% this month. Its Flexible Orange and Optional Payment Orange plans both offer 2.64% AER (2.7% APR). They are both available with a maximum 30.7% LTV at the age of 70. Properties must be valued at a minimum of £100,000 and the plans require a minimum advance of £10,000 to a maximum of £750,000. Both plans charge a fee of £599. The Flexible Orange plan does not allow interest to be paid but partial repayments of up to 10% per annum are allowed without an early repayment charge applying. The Optional Payment Orange plan allows interest to be paid but partial repayments cannot be made.

Rounding up the best rates this month was Pure Retirement, which offers 2.65% (2.7% AER) on its Classic Midi plan. It is available with a maximum 33% LTV at the age of 70 and properties must be valued at a minimum of £125,000. It allows a minimum advance of £10,000 to a maximum of £1 million. A fee of £500 is charged on this plan, which allows partial repayments of up to 10% per annum without an early repayment charge applying but interest cannot be paid.

* Partial repayments of up to 10% per annum are permitted without an early repayment charge applying.

Homeowners looking for a lifetime mortgage without a fee and from a minimum LTV of 30% will find that the most competitive rate this month came from Pure Retirement. Its Classic Lite Plus plan offers 2.61% AER (2.7% APR) and is available to those with a maximum 30.5% LTV at the age of 70. This plan is available on properties valued at a minimum of £125,000 and allows a minimum advance of £10,000 to a maximum of £1 million. This plan does not allow interest to be paid but partial repayments of up to 10% are allowed without an early repayment charge being applied.

The next most competitive rate this month came from LV=, with its Lifetime Mortgage Drawdown+ Standard 2 plan offering 2.64% AER (2.8% APR). This plan is available with a maximum 30% LTV at the age of 70 and who have a property valued at a minimum of £100,000. It allows a minimum advance of £10,000 to a maximum of £1.5 million. Partial repayments of up to 10% per annum can be made without an early repayment charge applying. Interest is not payable on this plan.

More 2 Life has a competitive rate of 2.66% AER (2.7% APR) on its Capital Choice Superlite Drawdown 3 plan. This plan is available to those with a maximum 31% LTV at the age of 70. To be eligible the property needs to be valued at a minimum of £100,000 and it allows a minimum advance of £10,000 to a maximum of £1.5 million. Interest cannot be paid on this plan but partial repayments of up to 10% per annum are permitted without an early repayment charge being applied.

* Partial repayments of up to 10% per annum are permitted without an early repayment charge applying.

Those looking for a lifetime mortgage at a minimum 40% LTV on a plan that charges a fee will find that this month Pure Retirement had the most competitive rate. Its Heritage Drawdown Max Standard Package (GILT ERCs) plan offers 3.98% AER (4.1% APR). This plan is available with a maximum 40.7% LTV at the age of 70 and the property must be valued to a minimum of £70,000. It allows a minimum advance of £10,000 to a maximum of £800,000. This plan charges a fee of £895. Interest is not payable but partial repayments of up to 10% per annum are allowed without having to pay an early repayment charge.

Pure Retirement also had the next best rate of 4.0% AER (4.2% APR) this month on its Heritage Drawdown Max Standard Package (Fixed ERCs) plan. This plan is also available at a maximum 40.7% LTV at the age of 70. The property must be valued at a minimum of £70,000. It allows a minimum advance of £10,000 to a maximum of £800,000. It charges a fee of £895 and allows partial repayments of up to 10% per annum without an early repayment charge applying. Interest is not payable.

Both Legal & General Home Finance’s Flexible Indigo and Optional Payment Indigo plans offered competitive rates of 4.04% AER (4.1% APR) this month. Both plans are available to those with a maximum 41.2% LTV at the age of 70. Properties must be valued at a minimum of £100,000. These plans allow a minimum advance of £10,000 to a maximum of £750,000. They both charge fees of £599. Flexible Indigo allows partial repayments of up to 10% per annum without an early repayment charge applying, but interest is not payable. Optional Payment Indigo allows interest to be paid but partial repayments are not permitted.

* Partial repayments of up to 10% per annum are permitted without an early repayment charge applying.

Two lifetime mortgage plans had highly competitive rates of 4.07% AER (4.1% APR) this month. Just had this rate on its J3 Drawdown plan which is available to a maximum 41.1% LTV at the age of 70. Properties must be valued at a minimum of £70,000 and a minimum advance of £10,000 to a maximum of £800,000 is allowed. Interest is not payable on this plan but partial repayments of up to 10% per annum can be made without an early repayment charge being applied.

More 2 Life Ltd also offers 4.07% AER (4.1% APR) on its Tailored Lifetime 5 Drawdown plan, which is available to a maximum 41.1% LTV at the age of 70. This plan is available to those with properties valued at a minimum of £70,000. It allows a minimum advance of £10,000 to a maximum of £800,000. Partial repayments of up to 10% per annum are allowed without an early repayment charge applying but interest cannot be paid.

Both Legal & General Home Finance’s Flexible Indigo and Optional Payment Indigo plans offer competitive rates of 4.08% AER (4.1% APR). These plans are available to those with a maximum 41.2% LTV at the age of 70 and on properties valued at a minimum of £100,000. They allow a minimum advance of £10,000 to a maximum of £750,000. The Flexible Indigo plan does not allow interest to be paid but partial repayments of up to 10% per annum are permitted without an early repayment charge being applied. The Optional Payment Indigo plan allows interest to be paid but does not allow partial repayments.

These charts have been compiled from all equity release drawdown products listed by Moneyfacts on 21 January 2020. The products chosen have been selected from joint equity release products and are based on a scenario where the youngest borrower is aged 70 . The deals have been selected from products offering drawdown, and as such there may be cheaper rates available on deals offering a lump sum only.