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Newcastle offers release at 6.5%

Newcastle Building Society is offering a new equity-release product at 6.5 per cent, a significant reduction from its previous rate of 7.5 per cent.

The lifetime equity-release plan is designed for homeowners aged 60 and over. Minimum property value is £40,000. Minimum loan is £8,000 and maximum is £500,000.

There is a completion fee of £400. There is a redemption penalty in the first five years of 2 per cent of the advance amount.

Newcastle is keen to underline that equity release can help minimise inheritance tax which is levied at 40 per cent on estates over £255,000.

It says securing a loan against the borrower&#39s property and releasing enough equity to reduce the value of the property will take the estate below or nearer the threshold.

The borrower keeps complete control of the property and the loan can then be gifted to the offspring by investing it in a relevant trust or bond, used to buy an annuity or spent.

A Newcastle spokesman says: “Although we have had other equity-release products out there, this is the most competitive yet.”


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