Equity Release Rates 2026 — Updated October 2026
- Lump sum lifetime mortgage range
- 6.2%–7.5% AERLump sum lifetime mortgage range
- Drawdown lifetime mortgage range
- 6.5%–8.5%+ AERDrawdown lifetime mortgage range
- Rate cannot increase after completion
- Fixed for lifeRate cannot increase after completion
- Last updated
- October 2026Last updated
Important: Equity release is a long-term commitment and will reduce the value of your estate. It may affect entitlement to means-tested benefits. Independent financial and legal advice is required. All plans recommended are from Equity Release Council approved lenders. Your home may be repossessed if you do not maintain required payments on a secured loan.
Lifetime mortgage (equity release) rates in 2026 range from approximately 6.2%–7.5% AER for lump sum plans and 6.5%–8.5%+ AER for drawdown plans. Verified rates on 1 October 2026 run 6.2%–7.5% AER for lump sum plans; higher-LTV plans, older applicants, and plans with enhanced features price up to 10.1%+ AER. All rates are expressed as Annual Equivalent Rates (AER) to account for compounding. Unlike standard mortgages, equity release rates are fixed for life — the rate agreed at the outset stays the same for the entire plan. This makes the rate comparison at the time of application especially important.
Equity Release Rates by Product Type — October 2026
Swipe the table sideways to see every column.
| Product type | Rate range (AER) | Notes |
|---|---|---|
| Lump sum lifetime mortgage | 6.2%–7.5% | Lower rate than drawdown — all interest accrues from day one on the full amount. |
| Drawdown lifetime mortgage | 6.5%–8.5%+ | Slightly higher rate — offset by interest only accruing on drawn amounts. Usually lower total cost. |
| Enhanced lifetime mortgage | 5.8%–7.5% | May be lower rate for qualifying health conditions (shorter expected loan term justifies better rate). |
| Optional payment plan | 6.3%–8.0% | Similar to standard but with option to make voluntary interest payments. Some lenders price at standard rate. |
| Legal & General lifetime mortgage | 6.2%–7.2% (indicative) | Best Provider, 2026 Equity Release Awards. Both lump sum and drawdown. |
| Aviva equity release | 6.3%–7.5% (indicative) | 25+ years market experience. Lifestyle Flexible Option (drawdown) and Lump Sum Max. |
| Just — standard plan | 6.3%–7.8% (indicative) | Standard plans competitive. Enhanced plans may be lower rate for qualifying health. |
| Canada Life / More2Life | 6.4%–8.0% (indicative) | Competitive — compare alongside L&G and Aviva for each specific case. |
What moves equity release rates
Age
Older borrowers can typically release more at a given rate — the lender anticipates a shorter loan period. But the rate itself is primarily set by the plan structure and lender, not the borrower's age.
Plan type — lump sum vs drawdown
Drawdown plans price slightly higher than lump sum. However, the total interest cost is usually lower on a drawdown plan because interest only accrues on drawn amounts — not the full reserve. Most clients taking money in stages are better served by drawdown despite the higher headline rate.
Health and lifestyle
Enhanced plans (available from Just, More2Life, and others for qualifying health conditions) can offer lower rates or higher release amounts. The actuarial assessment is used to justify better terms for shorter expected loan duration.
Lender competition
Comparing rates across all Equity Release Council (ERC) approved lenders is essential. Rates across the major providers vary by 0.3%–0.8% AER — which compounds to a significant difference in the total outstanding balance over 10–20 years.
Compounding effect
At 6.5% AER, a £100,000 lifetime mortgage grows to approximately £188,000 after 10 years and £352,000 after 20 years. At 7.0% AER, it grows to approximately £197,000 and £387,000. A 0.5% rate difference compounds to roughly £35,000 over 20 years on a £100,000 loan — making rate comparison critical.
What equity release costs: worked example
- At 6.5% AER
- balance after 15 years = approximately £309,000
- At 7.5% AER
- balance after 15 years = approximately £355,000
- At 8.5% AER
- balance after 15 years = approximately £408,000
Rate comparison: £120,000 lump sum lifetime mortgage, projected 15-year loan term
Rate difference between 6.5% and 8.5% = £99,000 over 15 years on a £120,000 initial loan.
This illustrates why whole-of-market comparison — not just the first rate offered — is so important for equity release.
Actual balance depends on compounding period. AER accounts for compounding; MER (monthly equivalent rate) is the monthly rate used for calculations.
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Rate context and outlook
Lifetime mortgage rates are fixed for life and are priced from long-dated gilt yields, which rose in September alongside other market rates. Bank Rate is 3.75% after the 17 September hold, with the next decision on 5 November.
Retirement interest-only and retirement mortgages follow the wider mortgage market, where fixed rates rose in September. Rates are indicative and depend on age, property value and the amount released.
Reviewed by David Doulton, Director, Doulton Bridging Finance — over 20 years in property finance. Last reviewed 1 October 2026. Doulton Money Ltd t/a Doulton Bridging Finance, FCA No. 814533.
Frequently asked questions
How are equity release rates expressed?
Equity release rates are expressed as Annual Equivalent Rates (AER) — the true annual rate accounting for compounding. This is important because lifetime mortgage interest compounds monthly — meaning interest accrues on the growing balance, not just the original loan. AER makes comparisons between plans accurate. Some lenders also quote MER (monthly equivalent rate) — the actual rate applied each month. 5.5% AER = approximately 0.447% per month (MER).
Is the equity release rate fixed for life?
Yes — all Equity Release Council approved lifetime mortgages have fixed interest rates (or capped rates). The rate agreed at completion cannot increase during the life of the plan, regardless of movements in the Bank of England base rate or wider interest rates. This is a significant consumer protection — the roll-up that borrowers agreed to at outset cannot worsen due to rate increases.
What is the cheapest way to structure equity release?
A drawdown plan where you take only what you need immediately typically costs less overall than a lump sum plan of the same size, even though the drawdown rate is slightly higher. This is because interest only accrues on drawn amounts — holding £50,000 in a drawdown reserve but only drawing £20,000 means you only pay interest on £20,000. The remaining £30,000 earns no interest until drawn. For clients who need money in stages, drawdown is usually the most cost-effective structure.
Can I make partial repayments on equity release to reduce the rate at which the balance grows?
Most ERC-approved equity release plans allow voluntary partial repayments of up to 10% of the original loan per year without early repayment charges. Making partial repayments prevents the full compounding effect — paying even £100/month on a £100,000 plan significantly reduces the balance growth over time. This is sometimes called an "optional payment" or "interest servicing" plan structure.
Which equity release provider offers the best rates?
Rates across providers vary and change regularly. Legal & General and Aviva are consistently competitive across their plan ranges. Just is the leader for enhanced plans (health conditions). More2Life is strong for both enhanced and standard plans. The best rate for your specific age, property value, and amount required may come from any provider — whole-of-market comparison across all ERC-approved lenders is essential before any application.
What is the minimum age?
55 for lifetime mortgages; many RIO and retirement mortgage lenders start at 50–55.
What happens when I die or move into care?
The loan is repaid from the sale of the home, usually after the last borrower dies or moves into long-term care.
Will it affect my benefits?
Releasing cash can affect means-tested benefits; your adviser will check this before you proceed.
Can my family still inherit?
Yes, what remains after the loan is repaid, and some plans let you protect a percentage of the property's value.
Do I need advice?
Yes. Equity release must be arranged through a qualified adviser, and we recommend involving your family.
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Equity release will reduce the value of your estate and may affect your entitlement to means-tested benefits. Advice is provided by a qualified equity release adviser. Check that this mortgage meets your needs if you want to move or sell your home, or want your family to inherit it.
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