As many as 23,470 lifetime mortgages worth over £1.015 billion were taken out between July 2005 and July 2006 by pensioners looking to raise extra capital through their homes.
According to MoneyExpert.com, the average APR charged on lifetime mortgages is around 6.63 per cent but rates range from around 5.7 per cent to as high as 8.9 per cent a difference of 3.2 per cent.
MoneyExpert.com says that by shopping around, a 70 year-old taking out an average policy of around £44,000 and living until 85 could reduce their final repayment by as much as £57,000.
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Interest paid on a lifetime mortgage is added to the initial loan and the total is repaid when the customer dies.
Sean Gardner, Chief Executive of MoneyExpert.com, said: For an increasing number of pensioners, equity release schemes are an important means of raising cash for a more comfortable retirement. But the complexities and variety of the products makes choosing the right scheme difficult.
As the market matures, more consumers will research the pros and cons of equity release and it stands to reason that they should be able to do some initial digging themselves. People need to know just how much they risk losing if they dont research the market properly.
Among the lowest rates on offer are those from Holmesdale Building Society with two products at 5.7 per cent and GE life, Just Retirement and Bristol and West at 5.9 per cent.
However, customers need to be aware that certain low rates are only on offer to people borrowing higher amounts. Rates can also vary depending on how much of the value of the home is set against the mortgage.
Some products also offer a drawdown facility allowing clients to release cash over a period of time.
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Gardner said: As with most financial products, choosing on rate alone is a risky business. Most equity release customers will inevitably enlist the help of a financial adviser, but if they do research the market first we would recommend treading carefully and considering what your priorities really are.
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