MortgagesMay 22 2013

Launch pad: equity release

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ByIona Bain

Rates on the plan have fallen by 0.49 per cent since the start of the year, with the last reduction in mid-January.

Customers that wish to withdraw tax-free cash against the value of their home can opt for the maximum equity release level available.

If they opt for a lower level, the remaining amount within the permitted equity release bracket can be guaranteed as an inheritance. Interest is paid back to the provider, on top of the amount withdrawn, when the property is sold.

* Customers can choose to pay all or part of the monthly interest on their loan.

* The availability of cash is subject to criteria set by the provider and will reduce the protected percentage on the home.

* Early repayment charges may be levied.

Philip Holton, financial planner for London-based Ashley Law, said: “This deal does seem very competitive when you consider that rates are typically above 6 per cent. But what I would say is that the rate isn’t always the overriding factor. It depends on the structure of early repayment charges and whether providers allow ongoing withdrawals.”