How much does equity release cost?

If you’re wondering whether equity release could be the right option for you, it’s important to know more about the costs involved.

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Much like you’d find with a regular mortgage, there are different fees to be aware of. It can be difficult to be sure just how much equity release costs, but that’s where we can help. We'll explain the benefits, drawbacks and costs of equity release to help you make an informed decision.

By getting in touch with The Equity Release Experts, everything will be explained to you in clear and simple terms. The initial chat is free – so phone 0800 188 4812 or request a callback now.


How much equity can you release from your home?

For homeowners aged 55 and over, equity release could be a way to help boost your finances in later life. But the amount of equity you could unlock from your home will depend on factors such as your health & lifestyle, value of the property and your age (youngest age if joint application).

Why not use our equity release calculator to see how much you could potentially release?

The amount of equity you release now could affect how much it costs in the long run. So, that’s why it’s important to know what equity release means for you.


Initial costs: How much will it cost you to release equity?

If you’re asking, “how much does equity release cost?”, we appreciate that your first thoughts will be about the here and now. After all, knowing all the upfront charges involved play a big part in making sure it’s the right option at the right time.

Like taking out a regular mortgage, there are different things that can affect the total initial cost. Here at The Equity Release Experts, we estimate the total initial cost to be around £2,245. But it won’t be the same for everyone. Here are the fees and services you need to think about:

Surveyor’s valuation

To take out equity release, the provider will instruct an RICS registered independent surveyor to conduct a survey/valuation on your property. This valuation is then sent to the lender.

Solicitors’ fees

If you’re happy to proceed with the lender’s offer, the next step is to instruct your own independent solicitor. We can provide you with a list of of panel solicitors who are specialists in this field, they are impartial equity release solicitors who look after all the legal matters for you. Of course, you are welcome to choose your own if you prefer.

There's not a set cost for this service, as each individual service the solicitor provides will be dependent on other potential legal matters that could apply - but we find that it typically costs around £1,250.

Application fees

While it’s not always the case, a lender may charge “application” or “administration” fees – much like a regular mortgage. It typically covers the set-up and legal costs of arranging your plan. They vary from lender to lender, so could be anything between being free of charge and £995.


Equity release advice

The Equity Release Experts’ service is completely free of charge, we'll compare plans from across the whole market and our advice fee of £1,799 is only payable on completion of a plan. You must seek specialist equity release advice before unlocking tax-free cash from the value of your home it is a regulatory requirement. Otherwise, your application won’t be accepted.

As The Equity Release Experts, we pride ourselves on getting to know you and your circumstances better. Then we can be sure what we recommend is truly right for you, if we don't believe equity release is right for you, we'll tell you.


Paying your equity release fees

The initial fees described above will cover the entire process of taking out an equity release plan. But you won’t necessarily pay everything in one go. Here are the differences in when you pay:

  • Surveyor’s valuation: If this is applicable, you will pay the fee at the same time as you make your application

  • Solicitors’ fees: This fee will be payable on completion. There is the option of adding this fee to the loan, however, any fees added to the loan will accrue compound interest, therefore where possible we recommend any fees are paid from your own funds.

  • Lender’s application: At the start of your plan when you receive your tax-free cash

Your initial consultation is completely free of charge – so call us now on 0800 188 4812 or request a callback to see if you could unlock some of the value in your home.


How much interest do you pay on equity release?

After the initial fees and charges, the next thing to be remember is how much interest is paid on a lifetime mortgage. There is no interest on a home reversion plan.

Knowing the effect of compound interest

If you take out a lifetime mortgage, the interest is rolled up each month or year (depending on your plan). It’s also known as compound interest (interest being charged on interest) and means the amount you owe on your plan will grow each year.

At the end of the first period, the interest rolls up and is added to the original loan amount. At the end of the next period, that interest is ‘compounded’ and is charged on the total amount owed – the initial loan and the first period’s interest. It then continues like this for the duration of the plan.

There are typically no monthly repayments as the loan, plus compound interest, is typically repaid through the sale of the property when the last remaining applicant passes away or moves into long-term care.


Keeping the cost down by paying the interest

In some cases, you may be able to make monthly interest repayments on your liftime mortgage, your adviser would need to find a plan that allowed you to do so. This means you’ll essentially be paying off all or some of the interest applied at the end of every month or year. By doing this, you could keep the cost of equity release down in the long run. If this is an option available to you, our specialist equity release advisers will be sure to let you know.

With a lifetime mortgage you can also make voluntary ad hoc repayments without incurring early repayment charges, subject to criteria, to help reduce the overall cost of borrowing.

Lifetime mortgage benefits:

  • You can unlock cash from your home, tax-free, to help meet your needs in later life

  • You’ll always retain full ownership of your home and can stay in it for as long as you wish

  • You can choose to make reduced or no monthly repayments to suit your circumstances

  • You’ll never owe more than your home’s worth

  • You may be able to remortgage your plan in the future to release further funds or secure a better interest rate, although this isn’t guaranteed and may be subject to early repayment charges

Lifetime mortgage drawbacks:

  • A lifetime mortgage is a loan secured against your home and subject to compound interest, meaning the amount you owe can grow quickly

  • Equity release will reduce your financial options in the future

  • Equity release will reduce the value of your estate and may affect your entitlement to means-tested benefits

  • Equity release may leave you with limited or no property equity remaining

  • A lifetime mortgage is a long-term financial product and is not designed to be fully repaid until the death or entry into long-term care of the last remaining borrower, otherwise early repayment charges may apply


What are my other options?

As part of our advice process, we’ll consider whether retirement interest-only (RIOs) and other mortgages may be suitable and can arrange advice on these if appropriate. Advice fee will vary.

An expert adviser can discuss your needs over the phone, face to face or via video appointment and explain more about equity release. They’ll always tell you if equity release isn’t right for you and there’s absolutely no obligation to go ahead.

Before deciding on equity release, it's important you're aware of some of your other later life finance options, which may include:

Is equity release right for you?

If you're considering unlocking funds from your home, we recommend that you make sure equity release is right for you. Helping you understand equity release and finding out whether it is right for you is our primary role. Both you and your expert equity release adviser must be sure it is before going ahead.

If you want you find out more about equity release, use our free calculator or download our free guide to find out more.

Taking the next steps

Are you thinking about equity release? Before you decide, you must first get expert advice – and that’s where we come in. Not only is it a regulatory requirement, but it means we can make sure you know exactly what it means for you and how much equity release will cost.

Our expert equity release advisers will make tailored recommendations based on your needs, current situation and future aspirations. And it all starts with a consultation that won’t cost you a penny. Get in touch on 0800 188 4812. Lines are open Monday-Friday 9am-5.30pm. Or why not request a callback to see what equity release could do for you?