Portman offers best mortgage

The Portman Building Society this week took the top slot for equity release mortgages following the launch of a product with a fixed rate of 7.09%. Its nearest rival, Legal and General is offering 7.19%, writes Mary O'Hara.

The new mortgage offers low up-front fees including a £300 acceptance fee. There is a minimum advance of £25,000 and the property must be valued at no less than £100,000.

Equity release has become one of the most popular ways to convert value in a property into cash to spend right away - especially for retired people whose original mortgage is paid off. But it has not been without problems; many people have been put off by past controversies.

Colin Taylor of specialist independent financial advisers, Key Retirement Solutions, says the Portman offer is a good one but that, as with all equity release products, he advises anyone considering it to make sure they are aware of redemptions and other clauses.

"Overall it's a good product and competition is always good for the market," he says. "But some of the competitors are reducing their redemptions over five years and there's not much between some of them."

There are two main types of equity release schemes, lifetime mortgages and home reversion schemes. Under home reversion schemes, all or part of the home is sold and the owner either takes the money as a lump sum or uses it to buy an annuity. With lifetime mortgages, ownership is retained and a secured loan is taken out on the property.