Best equity release rates December 2025

The best equity release interest rates for December 2025 are 6.16% (MER) – for lump sum lifetime mortgages That’s based on our latest check of the lowest rates available from the UK’s leading providers.

The information on the page will help you understand how interest on equity release works, and how you can get the best rate available to you. By comparing plans and providers, you can reduce the overall cost of borrowing with a lifetime mortgage – potentially saving thousands of pounds over the long term.

Lump sum rates

With a lump sum lifetime mortgage you access all of the money you borrow in a single payment. That makes it a popular choice for people needing a large cash release to fund a major purchase or clear their existing mortgage debt.

Best equity release interest rate: lump sum lifetime mortgage - December 2025

Age of borrower

55

60

65

70

75

80

85

Interest rate

6.16%

6.16%

6.16%

6.16%

6.16%

6.16%

6.30%

About our rates tables: Best rates from a search of leading UK equity release providers at Advise Wise on 01/12/2025. We have based these on a single person in Peterborough choosing to release the maximum available from a property worth £200,000. The interest rates shown are monthly equivalent rates (MER).

Equity release rate changes (2006-2025)

Interest rates for equity release change over time, just as with more traditional forms of mortgage lending. This table shows you how lifetime mortgage rates have changed over the past few years:

Where we sourced this data: 2006-2021: Key Equity Release, average interest rates for the first quarter of each year. 2022-2023: Key Equity Release, year-average rates. 2024: Advise Wise data for start of Q4. 2025: Advise Wise data for start of August.

Understanding how equity release rates work

With a lifetime mortgage (the most popular form of equity release), the interest is added to your loan each month or year instead of being paid off straight away. This means the amount you owe will grow over time, unless you choose to make voluntary repayments.

Most lifetime mortgages use compound interest. That means each year, you pay interest not only on the original amount you borrowed, but also on the interest that has already been added. This is why a lifetime mortgage can be an expensive way to borrow – but the advantage is that you don’t have to make regular repayments.

What affects equity release interest rates?

The rate you’re offered will depend on several things. These start with the current economic climate, including Bank of England interest rates and the cost of long-term borrowing, especially interest rates on government bonds (gilts).

Rates are also affected by each lender’s own approach to pricing. This is one of the reasons why comparing rates from a number of providers is so important.

Lifetime mortgage rates have risen in recent years, fuelled by these underlying conditions. Also, they are generally higher than traditional residential mortgage rates, reflecting the fact that lenders don’t know when the loan will be repaid.

What interest rate am I likely to achieve?

As well as underlying economic and commercial factors, the rate you receive will depend on your own individual circumstances, including:

Loan-to-value (LTV)

How much you want to borrow compared to your home’s value. The interest rate is typically higher when the LTV is higher.

The product you choose

Different lifetime mortgage products from the same lender may have different interest rates. For example, a lender’s drawdown plan may come with a higher interest than its lump sum plan.

Your health and lifestyle:

You may be eligible for lower interest rates with an enhanced lifetime mortgage on account of health conditions or certain lifestyle choices, such as smoking.

The only way to know for certain what rate you can get for a lifetime mortgage is to make enquiries based on your own circumstances. Call us on 0800 234 5678 or request a call back and we will arrange for one of our selected equity release advisers to prepare quotes from the country’s leading providers.

What’s the difference between AER and MER?

Both AER (Annual Equivalent Rate) and MER (Monthly Equivalent Rate) show how interest is added to your loan:

MER

Shows the rate applied each month before compounding.

AER

Shows the equivalent yearly rate once the effects of compounding are taken into account. The AER is typically slightly higher than the MER.

The main takeaway here is that, when looking at interest rates from different equity release providers, make sure you compare like-for-like for an accurate comparison.

Fixed vs variable interest rates

Most lifetime mortgages in the UK are fixed rate loans. The rate is set for the life of the loan, giving certainty about how the debt will grow.

If you take out a drawdown lifetime mortgage, each time you withdraw money a fixed interest rate for that withdrawal will be set at the prevailing rate at that time.

Some providers do offer variable rate lifetime mortgages. This is where the rate can go up or down in line with market conditions. Some variable plans have an upper limit (cap) so that the interest rate will not go above a certain level.

Will equity release interest rates rise or fall in the future?

Like all borrowing costs, equity release rates are influenced by the wider economy, especially long-term gilt yield and Bank of England decisions on base rates. It’s not possible to predict with certainty whether they will rise or fall in the future. Rates can change quickly, even if industry experts have predicted rate stability.

However, you may decide to look into what rates are doing and come to your own conclusion about where they are headed, and what this means to you.

Equity release guides

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Page updated on 11th November 2025, Reviewed by Richard Groom