Equity Release Costs
Equity Release Costs
Is uncertainty about how much equity release costs stopping you from applying?
Equity release could be your ticket to a financially free retirement, so don’t be discouraged because you don’t have the facts to work with.
Let’s be your guide and work through what equity release costs so that there’s no hidden surprises.
Through this editorial, you’ll learn:
- What’re the set-up costs of equity release?
- When can you expect to pay what?
- What’re the total costs of equity release?
Our expert team has reviewed over 220 plans from every regulated plan provider and breaks down everything you need to know about equity release costs.
Find out more!
Before You Start Reading….
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What Are the Equity Release Set-up Costs?
Equity release set-up costs are the fees you’ll need to pay to start your equity release application process.
These initial set-up fees are for your application and advice.
Adviser fees differ per adviser and could be a percentage of the equity released, while others charge a fixed amount.
The application or arrangement fees cover the charges for the provider’s legal process and administration of your application.
What Fees Will You Pay?
The fees you’ll pay include surveyor’s valuation costs, solicitor’s fees, lender’s application fees, and advice fees.
Here’s more information about these.
Your provider often covers the surveyor’s valuation costs.
Some providers charge an additional fee, but this is offset by other benefits that they offer their clients.
If a surveyor’s charge is payable, it’s usually due upfront upon application.
Solicitor’s1 fees will normally range from £750 to £1000, depending on your solicitor.
These fees cover money laundering checks, legal advice, transfer costs charged by your provider, and getting your property’s land registry documentation.
You’re required by law to get independent legal advice when taking out equity release.
Lender’s application fees range from £500 to £1000; however, you can also be charged a percentage of the equity you release as a fee.
Your lender’s application is usually paid when you receive your tax-free funds at the start of your plan, although some lenders may require this upfront.
Advice fees2 that you can expect to pay range from £900 to £2000, depending on your adviser.
Some providers will offer you an adviser free of charge as part of the process.
What Additional Costs Are There With Equity Release?
The additional costs of equity release are for the surveyor’s fees and solicitor’s costs.
What’s the Total Cost of Equity Release?
The total cost of the charges can range between £1,500 and £3,000, depending on the type of equity release plan you choose,
The interest charged on your loan value is also a cost you’ll have to pay when you move into permanent care or pass on one day.
When Do You Pay Your Equity Release Fees?
You pay equity release fees at different steps throughout the process.
Here’s when you’ll pay the fees.
- Financial advisor fees – If this is charged, it can be paid upfront or included with the loan.
- Provider’s application fees – Where applicable, this is usually paid on your plan’s initiation when you get your money.
- Interest on your mortgage – Interest on a lifetime mortgage is compounded and generally settled when your home is sold if you pass away or move into long-term care.
- Surveyor costs – If payable, these costs are typically paid with the application submission.
- Solicitor’s fee – These fees are normally paid when your money is paid out on completion.
What Are Early Redemption Charges (ERCs) For Equity Release & Lifetime Mortgages?
Early redemption charges (ERCs) that could be payable on equity release and lifetime mortgage products are charged by your provider if you settle your loan before its term ends.
You’ll be charged either fixed-term or gilt-based rates if you sell your home or repay the loan before you pass on or enter permanent care.
Equity Release Calculator
Use our equity release calculator to see how much money you can release from your property.
Can You Pay Back Equity Release Early?
Yes, you can pay equity release back early.
Some providers may allow you to repay the money sooner, but you may be charged an early repayment fee.
Is Equity Release a Competitive Means of Borrowing?
Yes, equity release is a competitive means of borrowing.
Equity release products are flexible and are strictly regulated by the Equity Release Council3.
Your financial adviser will take you through your options and compare them to other products on the market so you can make an informed decision.
How Can I Reduce the Cost of Equity Release?
You can reduce the costs of equity release by making monthly payments towards the interest owing on your loan.
You can also pay up to 40% of your plan per annum; this will, of course, depend on your provider.
Other ways to make equity release more cost-effective are opting for downsizing protection and using a drawdown lifetime mortgage, so you only pay interest on funds used.
How Much Does It Cost to Release Equity?
Equity release can cost between £1500 and £3000, depending on the provider and your deal.
This excludes the interest that will have to be paid when your plan ends.
Will the Providers Give Me a Breakdown of Equity Release Costs?
Before you sign up for a plan, your provider will present you with a detailed breakdown of the costs you’ll potentially have to pay during the equity release process.
Your financial adviser can walk you through the details of equity release, including costs, so you can decide if it’s the right option for you and if you can afford the fees.
If you’re thinking about releasing equity, you should seek professional advice before making final decisions.
How Much Can You Release?
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Editorial Note: This content has been independently collected by the EveryInvestor advisor team and is offered on a non-advised basis. EveryInvestor may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations. Learn more about our editorial guidelines.