A guide to equity release interest rates

This content was reviewed and approved by Amy Fletcher.

Equity release is a way of releasing some of your home’s value into accessible cash. But how much interest do you pay on equity release? To find out, read our guide to equity release interest rates.

The information on this page should not be considered as financial advice. If you are unsure what’s right for you, please make sure you speak to a financial adviser.

What is equity release?

Equity release allows you to unlock cash tied up in your home while you continue to live in the same property. It is a means of generating an income or a lump sum, perhaps for your retirement, without having to downsize or move to a new area.

People aged 55 and over often release equity from their home through a lifetime mortgage. You can work out how much equity you could release from your home using our free equity release calculator. It is important to consider the implications of releasing equity and seek independent financial advice from a regulated adviser before you commit. The amounts shown are a guide, as every lender will have a different amount they will let you borrow.  

How much interest do you pay on equity release?

There is no set interest rate for equity release. The amount you’re charged can vary between lenders and products. Generally, the interest rate is also based on your age and how much equity you want to release.

However, lifetime mortgages are a type of equity release that uses compound interest. This means the amount of interest you pay will be based on the value of the loan plus any interest already accrued. As a result, the interest is ‘rolled-up’ and you’ll pay interest on the total of interest already charged as well as the original loan. This could lead to a significant increase in the total amount you owe.

Long‑term UK GILT rates directly influence equity release interest rates because lifetime mortgages are funded using long‑term government bonds. When GILT rates rise, equity release rates also increase, and when rates fall, equity release rates tend to decrease. GILT movements can also affect early repayment charges (ERCs), which typically move in the opposite direction—higher GILT rates mean lower ERCs, while lower rates can result in higher ERCs. The 15‑year GILT is the most relevant benchmark, and its fluctuations have historically aligned with changes in equity release rates, as seen during the COVID‑19 period and after the 2022 mini‑budget.

Most providers charge a fixed interest rate, which means it won’t change during the life of the loan. 

What have equity release interest rates looked like in the past few years?

Like many mortgage products, equity release interest rates are higher than they were a few years ago. These interest rates can have a significant impact on how much money you plan to release and how much you will owe in the future if you choose not to make any repayments.

At the end of June 2025, the average interest rate was 7.24% according to the Equity Release Council. This compares to 6.64% that was seen a year earlier.

It is important to note that equity release interest rates can also be affected by your personal circumstances such as your health status, so can be higher or lower than the median rate.

What is the no-negative equity guarantee?

The equity in your home refers to its current value minus any loans you’ve taken out against it. When a home has ‘negative equity’ this means you owe more than the value of the property. With a ‘no-negative equity guarantee’ on your lifetime mortgage, you won’t owe more than the property is worth when you come to sell it.

Many equity release plans enable you to live in your home until you move into permanent care, or you pass away. Your property will then be sold and the proceeds used to pay off your loan. All remaining monies will either go to you, or in the event of your death,  your chosen beneficiaries as stated in your will.

All equity release products that meet the Equity Release Council’s Product Standards include a ‘no-negative equity guarantee’ for added peace of mind.

What else can affect how much interest you pay on equity release?

From lifestyle choices to the condition of your home, many factors can affect interest rates on equity release. These include: 

• Your property: Your home’s current value, when it was built, and its location can all affect the amount of interest you’ll pay on equity release. Similarly, the condition of the property and any other factors that could devalue it are also considered.
• Your finances: Equity release interest rates could be calculated based on your employment and/or retirement income, credit history, and the state of the economy at the time. 
• Your status: Whether you’re married, have a long-term partner, or live alone may be factored into equity release interest rate calculations.  
• Your lifestyle: Your age, health, and lifestyle are also important factors. Similarly, how much you drink, smoke, and whether you partake in extreme sports can also be important for determining interest rates.

It is worth noting that being in poor health could give you access to a better deal from your equity release provider in the same way that enhanced annuities can. It could also allow you to take out a larger loan or get a lower interest rate.

Who is eligible for equity release?

Most lenders require you to meet certain criteria to qualify for equity release. This usually includes:

• You’re aged 55 or older and a UK homeowner.
• If you’re applying jointly for equity release, both you and your partner must be aged 55 or older.
• Your property has a value of at least £70,000.
• Your property is in reasonable living condition and does not require major refurbishment or structural work.
• The property is your permanent residence.

What other costs are involved with equity release?

If you take out equity release you may be charged valuation fees and arrangement fees for setting up payments. You may also be charged a handling fee by your provider for transferring the money from your equity to you.

Because you can only take out an equity release mortgage through a financial adviser, you may be required to pay for independent financial advice. LV= also offers a free brochure on equity release that you can request to help you decide if it’s the right option for you.

You’ll also need to instruct your own independent solicitor, who will explain the detailed terms and conditions of the lifetime mortgage to you, so you understand what you are agreeing to. You'll therefore need to pay their associated fees.

Equity release FAQs

Is equity release a safe option?

In the UK, equity release is regulated by the Financial Conduct Authority (FCA), while the Equity Release Council also has a robust code of conduct to safeguard customers.

Can I sell my home after taking equity release?

Yes, you can still sell your home after taking equity release.

• You can either transfer your equity release borrowing across to your new home because lifetime mortgages are portable, as long as your new property is acceptable to the lender.
• Or you can decide to sell your home with an equity release plan in place, and use the proceeds of the sale to repay the equity release loan. Then, any remaining balance is yours and can be used as you wish, whether to buy another property, take a holiday, or pay for other expenses.

Are there other ways to release equity from my home?

Yes, there are other ways to unlock equity in your home aside from equity release so it might be worth speaking to a financial adviser to discuss this. 

Are you still wondering how much interest you might pay on equity release?

If you’re aged 55 and over and equity release is something you’ve considered, our equity release advice service will help you decide whether this is a good option for you.