December 2005 Fierce competition is starting to break out between the providers of lifetime mortgages (a form of Equity Release) - Not sure what Equity Release is? Read our guide) This is having a dramatic effect of cutting costs for the older generation of homeowners seeking to unlock capital tied up in their homes. Until recently the Equity Release (ER) sector was characterised by two negatives, firstly the market was not regulated and secondly costs (ie the interest rate charged) was expensive. But these problems are now generally sorted great news for consumers. Simple Definition of a Lifetime Mortgage

• The homeowner retains full ownership of their property
• A loan (the lifetime mortgage) is secured against it
• The loan is received as either a lump sum or it can be used to buy a stream of monthly income such as an Annuity
• The loan lasts until you, or if married the last survivor dies or sells the home
• Most lifetime mortgages come with a 'no negative equity' guarantee which means that if you live till 110 and the interest bills on the original loan are greater than the value of the home you can't be kicked out - This is a CRITICAL point
• These style of loans tend to be more expensive than traditional mortgages because the lender faces the risk that over a long period of time the rolled-up interest charges can be more than the property is worth
• From Oct 2004 the Financial Services Authority has regulated all forms of Equity Release including lifetime mortgages this means that consumers not only have a watchdog but also can be sure that they are not dealing with cowboys as in the past

So Who's Cutting Their Costs Of Lifetime Mortgages

• GE Life a subsidiary of the mega American corporation General Electric has reduced its fixed rate to 5.89% from 7.19% which is the lowest rate quoted in the UK market
• Bristol & West has cut their interest rate from 6.65% to 5.95%
• Northern Rock from 6.59% to 6.05%
• Portman Building Society now quotes 6.15% and Just Retirement at 6.19%