A guide to equity release interest rates UK

This content was reviewed and approved by Amy Fletcher.

Equity release interest rates determine how much a lifetime mortgage will cost you over time. Because interest is usually left to build up rather than paid monthly, the rate you're offered has a direct effect on how much your loan grows and how much equity is left in your home in the future.

There's no single UK-wide rate. What you're offered depends on your lender, the product you choose, your age and your property.

This guide covers current average rates, how rates are actually set, the difference between fixed and variable options, and the factors that affect your own borrowing cost.

If you'd like a broader introduction to the topic first, our equity release hub page is a good place to start.

What are equity release interest rates in the UK?

Equity release interest rates are the rates charged on a lifetime mortgage, which is the most common type of equity release in the UK. Each lender and each product has its own pricing, so two people releasing equity in the same month could be offered different rates.

Rates are quoted as either an annual or monthly percentage, and most UK providers fix this rate for the entire life of the loan. What you're offered will depend on things like your age, your property's value and how much you want to borrow, all of which we cover in more detail later on this page.

What are the current equity release interest rates in the UK?

There is no set interest rate for equity release. The most recently published figure from the Equity Release Council puts the average equity release interest rate at 7.24% at the end of June 2025. That's up from 6.64% at the same point the previous year.

These averages give a useful benchmark, but they're not a quote. Your own rate could sit above or below this figure depending on your age, health, property, the specific product you choose and how much equity you want to release. 

Because rates move with the wider market, it's worth checking current figures directly with a lender or adviser rather than relying on any published average when you're ready to apply.

How are equity release interest rates set?

Lifetime mortgages are funded by lenders using long-term government bonds, known as GILTs. This means GILT yields have a direct effect on equity release interest rates. When GILT rates rise, lenders' funding costs rise too, and equity release rates tend to follow. When GILT rates fall, equity release rates tend to fall as well.

The 15-year GILT is generally seen as the most relevant benchmark for this market, and its movements have historically lined up with changes in equity release pricing. Two clear examples of this were the COVID-19 period and the aftermath of the 2022 mini-budget, when shifts in GILT yields were followed by matching shifts in equity release rates.

While the current rate offered to new customers can change with the GILT movements, most providers charge a fixed interest rate, so once your lifetime mortgage is complete the interest rate won’t change during the life of the loan.

GILT movements can also affect early repayment charges (ERCs) where the ERC is variable, though usually in the opposite direction to interest rates. When GILT rates rise, ERCs typically fall, and when GILT rates fall, ERCs can rise. It's a useful detail to understand if you're weighing up whether you might want to repay some or all of the loan early. Some providers charge a fixed ERC, so you will know exactly how much it will cost if you need to repay early.

What is the no-negative equity guarantee?

Negative equity means owing more than your home is worth. With compound interest building up over the years, this might sound like a real risk, but there's a safeguard built into standard-compliant products.

The Equity Release Council’s no-negative equity guarantee means you, or your estate, won’t owe more than your property's value when it's eventually sold, no matter how much interest has accrued over the term of the loan. All products meeting the Equity Release Council's Product Standards include this guarantee as a requirement, giving you a clear limit on your exposure regardless of how the loan balance has grown.

Other costs that affect your overall borrowing cost

The interest rate isn't the only cost to factor in when working out what equity release will cost you overall. Other charges to budget for include:

• Valuation fees: Paid to the provider to assess your property's value.
  
• Arrangement fees: Paid to the provider for setting up the plan.
  
• Handling fee: Which some providers charge when transferring the funds to you.
  
• Independent financial advice: Since regulated advice is required before taking out an equity release product.
  
• Solicitor's fees: Since you'll need your own independent solicitor to explain the terms and conditions before you agree to anything.

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.

Is equity release right for you?

Equity release isn't the right choice for everyone, and it's worth taking the time to weigh it up properly. Releasing equity reduces the value of your estate, which means less to pass on to loved ones, and it can affect your entitlement to means-tested benefits.

It's also worth thinking about the interest cost over time against the value of accessing money now. Other options, such as downsizing or standard borrowing, might suit your circumstances better, and a financial adviser can talk you through these alongside equity release.

Our guide to the pros and cons of equity release sets out the full picture in more detail. If you'd like an estimate for how much you could release, try our free equity release calculator.

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.

Why are equity release interest rates higher than standard mortgage rates?

Lifetime mortgages carry more long-term risk for lenders, since there are usually no monthly repayments and the loan may run for many years. Rates are also linked to long-term GILT yields, which tend to sit higher than short-term mortgage funding costs.

Can I reduce how much interest I pay on equity release?

Some providers, including LV=, allow voluntary partial repayments, which can slow down how quickly the balance grows through compounding. Ask your adviser whether this feature is available on the products you're considering.

Does my health affect the interest rate I'm offered?

Yes, in some cases. Certain health conditions can lead to a larger loan or a lower rate, in a similar way to how enhanced annuities work.

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.