Equity release customers will save almost £300m in borrowing costs over the next 20 years having used the freedom to make voluntary penalty-free loan repayments.

This is according to new data from the Equity Release Council ERC) which shows that, during 2022 and 2023, homeowners with equity release plans have made more than 360,000 voluntary penalty-free partial repayments to reduce the sizes of their loans.

The total value of repayments also grew by 18% from £102m to £120m from 2022-23.

The freedom to make such repayments, typically up to 8-15% of the loan each year, has been a compulsory feature of all products which meet Council standards since 28 March 2022.

By reducing the amount owed, it helps to reduce the compounding of interest over time. Crucially, customers do not lose the right to make voluntary part-repayments if they choose not to do so and have no risk of their home being repossessed for missing repayments.

Because repayments are voluntary, there is also no requirement for customers to pass affordability tests to qualify for a loan, unlike with standard interest-only or capital-and-interest repayment mortgages.

ERC chief executive Jim Boyd commented: “These figures highlight how the flexible design of modern equity release products give customers more levers to pull to adapt to changing circumstances.”

He added: “While equity release helps people maximise their money in later life, with no ongoing repayments required, people are making significant savings by chipping away at their loans when they can afford to.

“Small repayment habits add up to significant savings over time. Voluntary repayments make it possible for customers to access property wealth in the here-and-now while increasing the chances of preserving something to leave behind as a traditional inheritance.”