Save £62,000 on equity release

Britons who used a lifetime mortgage to release equity from their home more than five years ago could be throwing away more than £62,000 by not switching to a better rate.

In the last five years average interest rates on lifetime mortgages have fallen dramatically, but many people are unaware they can switch a lifetime mortgage to a new lender.

And many lenders do not charge exit fees after five years, equity release specialist Key Retirement Solutions points out.

"In the last five years alone, the amount of cash released through equity release plans has risen by over 100 per cent, with many in, or nearing retirement releasing equity from their homes to supplement their pensions or to give to family to pay towards their education or to help them get on the housing ladder," said Dean Mirfin, business development director at Key Retirement Solutions.

"As consumer demand has grown, so too has competition in the market - hence we have seen interest rates fall quite substantially over that period."

In 2001 average lifetime mortgage rates were between 7.99 and 8.5 per cent - currently average rates stand at about six per cent.

And this difference can translate into a saving of tens of thousands of pounds on the interest that builds up on the loan.

"For many consumers, an equity release plan is something they may have for over 20 years, but that does not mean that they cannot take advantage of new and better deals that come on the market over that period," Mr Mirfin said.

"The key here is to take advice from an independent adviser who can research the whole market for them and identify if savings can be made through a remortgage."

The average amount released through lifetime mortgages ten years ago was £40,856 at an interest rate of 8.25 per cent. If someone switched this amount to a six per cent deal now, they would save an astonishing £62,607 in 15 years Key Retirement Solutions calculates.