Falling interest rates on mortgages are not only good news for people seeking to purchase a home. There are products out there for older, retired people that are benefitting from the low Bank of England interest rate.
The elderly of the population are often richer in terms of assets, but may be poorer in terms of actual money, living off pensions as many are.
Equity release products can help to redress this imbalance. By mortgaging off or selling a percentage of the value of a property, it is possible to turn some of that value into cash that to be used on anything, while remaining living in the home.
The interest on these products can stop people from taking them out however. Generally coming with quite high interest rates, there is usually no set amounts to repay with this kind of loan. They continue to roll until the borrower sells their home or dies. The lender then regains their money from the house sale.
The interest can add up and lead to a huge amount due to be paid back.
However, recent drops in the base rate of the country have been leaving mortgages with opportunely low rates. This has also dropped the average interest rate on these equity release products from 6.52% to 6.02% over the last 12 months, it is reported.mortgages
So if you are retired and could do with some extra cash to augment your pension, now could be the time to look into an equity release. However, you need to consider your inheritance, and how much freedom you will have once in the contract. Make sure to read the small print or seek advice.
