Finding the best equity release deals in 2025 could play a significant role in your financial future.

Given that a staggering £6.2bln was released from UK homes in 2022 alone,¹ it is clear that that this is a popular lending option in later life.

We have taken it upon ourselves to investigate, analyse, and present you with the most accurate and up-to-date information on this topic. 

Our experts at SovereignBoss have thoroughly researched the latest market trends, economic shifts, and consulted with industry experts to bring you a comprehensive guide that is both approachable and thorough. 

Whether you are familiar with lifetime mortgages and home reversion plans or are hearing these terms for the first time, our goal is to make these complex topics understandable.

What Are Equity Release or Lifetime Mortgage Deals?

These deals are designed to give homeowners, typically aged 55 or above, the opportunity to unlock the wealth tied up in their property without the necessity of moving or selling their homes. 

This proves especially advantageous for individuals who, while possessing significant property wealth, may find themselves cash-poor, possibly due to limited pension funds or other income streams in retirement.

How does it work?

By leveraging your home's value, these loans provide a lump sum, regular withdrawals, or both.

This involves securing a loan against your property, which, along with accrued interest, is typically repaid upon selling your home when you die or move into long-term care.

Alternatively, with some types of equity release, you can opt to sell a portion or all of your home to a provider while retaining the right to live there. 

Beware

While these deals can provide a financial boost, they also come with long-term financial implications. 

Equity release can affect your estate, beneficiaries, and eligibility for means-tested benefits.

It is crucial to fully understand the terms and seek professional advice before committing to a plan.

What Are the Best Deals for Equity Release?

The two best primary forms of equity release are a lifetime mortgage and a home reversion plan.

Lifetime Mortgage

A lifetime mortgage is the most common type of equity release.² 

You can borrow a portion of your home's value, with interest added to the loan, which is repaid when you either pass away or move into long-term care.

Home Reversion Plan

With a home reversion plan, you sell all or part of your home to a home reversion provider in return for a lump sum or regular payments. 

You retain the right to live in the property until you die, usually rent-free, but you are also responsible for maintaining the home.

It is important to remember that besides relinquishing ownership of part or all of your property, providers generally pay below market value for their share. 

How Do Equity Release Deals Work?

Equity release works on a straightforward principle; it allows homeowners over 55, to access the financial value of their property without having to sell or vacate. 

Under these arrangements, the money tied up in the property is released providing you with additional funds, which can be spent as you wish.

You could supplement your retirement income, make home improvements, travel, or help younger family members onto the property ladder.

The repayment method varies depending on the equity release deal chosen, but it typically stems from the sale of your property.

In a lifetime mortgage, the borrowed capital and interest are repaid upon death or transitioning to long-term care.

Conversely

With a home reversion plan, the provider is entitled to a predetermined percentage of the property's value upon sale.

The process of equity release may seem complex, but with proper guidance and advice, it can be a beneficial financial decision for many homeowners in their later years.

Choosing the Right Equity Release Deal for You

Choosing the right deal is crucial and depends on your individual circumstances. 

Factors to consider include: 

• Your age
• Health
• Property value
• How much money you need
• How you want to receive it (as a lump sum, regular withdrawals, or a combination of both)

Why Is It So Important to Find the Best Equity Release Deal?

Finding the best plan is crucial as it ensures you maximise the financial benefits of your property and minimise costs and interest.

Additionally, it helps safeguard your financial future and preserve an inheritance for your heirs.

How Do I Find the Best Deals in the UK?

Finding the best deal demands a well-informed approach of researching and comparing plans from various providers.

Using online comparison tools can help highlight the most suitable options based on factors like interest rates, plan flexibility, and any early repayment charges.

However, these tools may not delve into the intricacies of each deal. Thus, consulting a financial adviser specialising in this form of borrowing is recommended.

They not only guide you through the nuances of each plan but also assess other potential financial solutions that may better align with your goals.

How Do I Choose and Compare Equity Release Deals?

Choosing and comparing available plans can seem daunting, but a structured approach can make it more manageable.  

The process can be simplified with the following steps:

• Consult an Adviser: Start with a qualified equity release adviser or broker who can offer personalised advice and support tailored to your situation and goals.
• Assess Interest Rates: Consider whether a fixed or variable rate is more suitable, keeping in mind that lower rates usually mean less to repay in the long run.
• Evaluate Plan Flexibility: Look for plans that allow voluntary repayments or have 'drawdown' facilities, which can help manage the overall cost of the loan.
• Check Features and LTV Ratio: Ensure the plan has features meeting your needs, such as inheritance protection, and compare the Loan-to-Value (LTV) ratios offered by different plans.
• Consider Providers' Reputation: Select a provider who is a member of the Equity Release Council to ensure adherence to industry standards and codes of conduct.
• Seek Personalised Advice: An equity release adviser can help you understand the products, navigate the considerations, and assist you in applying for the deal that best suits your circumstances.

Following these steps can simplify the selection process and help you make an informed decision.

Interest Rates and Fees Comparison

View the current equity release interest rates, or lifetime mortgage rates.

Provider	Monthly (Rate)The amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed.	AER (Annual Equivalent Rate) The percentage of interest on a loan or financial product if compound interest accumulates over a year during which with no payments are made.	APR (Annual Percentage Rate) The number that represents the total yearly cost of borrowing money, expressed as a percentage of the principal loan amount.
Pure Retirement	5.97%	6.14%	6.14%
Canada Life	6.13%	6.31%	6.31%
Canada Life	6.16%	6.34%	6.34%
Aviva	N/A	6.35%	6.30%
Canada Life	6.20%	6.38%	6.30%
Canada Life	6.24%	6.42%	6.38%
Just Retirement	6.25%	6.43%	6.42%
Just Retirement	6.25%	6.43%	7.20%
Canada Life	6.27%	6.45%	7.20%
Just Retirement	6.28%	6.46%	6.45%

Last update: 17 February 2025

Scenario

• 60 Year Old Single Male
• £300k Property Value
• £30k Release

*This rate was accurate upon publication. While we review our figures regularly, they may have changed since this article was last updated.

What Are the Average Interest Rates in the UK in 2025?

The average equity release interest rate is 5.97% to 6.28% (APR)*, according to the Spring Market report released by the ERC.²¹

*This rate was accurate upon publication. While we review our figures regularly, they may have changed since this article was last updated.

Tips for Comparing Equity Release

When looking into equity release, do not focus solely on the interest rate. 

Keep your comparisons to those lenders who are members of the Equity Release Council.³

Why?

All Equity Release Council members now offer the option to make voluntary repayments totalling 10% of the loan per year without incurring Early Repayment Costs.⁴

They also have a ‘No Negative Equity Guarantee’, which ensures the repayment never exceeds your property’s sale value.

Also, as previously mentioned:

Consider the flexibility of the plan, terms, and conditions.

Make sure to compare similar products; lifetime mortgages with lifetime mortgages, and home reversion plans with other home reversion plans. 

Each product type has unique features, so cross-type comparisons can be misleading.

Consulting with a financial advisor can be invaluable in navigating these kinds of decisions, and can assist with finding you the best deals from the best equity release providers on the market.

Common Questions

In Conclusion

Equity release can open up new financial possibilities for homeowners, but it requires a thorough understanding of the available options.

It is not solely about low interest rates, but about securing a plan that aligns with your needs and future goals.

While these decisions may seem daunting, informed choices can be made through careful research and expert advice.

Our guide serves as a starting point to understanding equity release in 2025.

For additional guidance, consider consulting a financial advisor who can assist you in navigating the diverse range of deals available.