How to Cut the Setup Costs of Equity Release in the UK

Looking at Minimising Equity Release Setup Costs? Try Shopping Around for Plans and Providers. Read on for More Tips and Tricks…
  • Last Updated: 06 Feb 2024
  • Fact Checked
  • Our team recently fact checked this article for accuracy. However, things do change, so please do your own research.


Francis Hui

Key Takeaways

  • Minimising equity release setup costs in the UK can be achieved by comparing providers, negotiating fees, and avoiding unnecessary optional services.
  • The common equity release setup costs in the UK include arrangement fees, valuation fees, solicitor fees, and potentially advisor fees.
  • Reducing costs can be done through careful comparison of plans, negotiation of fees, and opting out of nonessential services.
  • It's important to know that equity release setup costs in the UK can vary widely between providers, and these costs can significantly impact the overall value of your equity release.
  • Negotiating setup costs is possible, particularly arrangement and advisor fees, but it may require patience and a clear understanding of the market.

With any financial transaction, there are associated costs and equity release fees that can add up to quite a substantial amount, but there are tips and tricks for minimising equity release set up costs.

The average total setup costs range between £1,500 and £3,0001, and are usually only payable upon completion of your equity release plan.

Every Investor’s experts specialize in equity release and lifetime mortgages, and we provide reliable information and guidance to help you achieve your financial goals.

In This Article, You Will Discover:

    We’ve put together this article to help you cut the costs of your equity release mortgage. Read on to find out more.

    What Is Equity Release In The UK?

    Equity release is a financial tactic for homeowners aged 55 and over, enabling them to convert part of their home’s equity into usable funds through various equity release options.

    It's particularly useful for funding retirement or covering unexpected expenses in later life.

    The two principal varieties of equity release are lifetime mortgages and home reversion schemes.

    A lifetime mortgage entails borrowing against your home's value, with the debt and interest repaid posthumously or when you enter permanent care.

    In a home reversion plan, you sell a part of your home for a cash sum or income, while still residing there.

    What Are Setup Costs?

    Setup costs in equity release refer to initial expenses incurred when arranging a plan.

    These often include advice fees, surveyor costs, and legal fees.

    These costs can vary widely, making it vital for individuals to understand them upfront.

    They play a crucial role in the overall financial impact of equity release.

    Tips to Reduce Your Overall Equity Release Setup Costs

    The best tips to reduce equity release set-up costs include getting professional advice and shopping around for the best and most economical plans. 

    Let’s look at some other tips that can help you reduce equity release set-up costs and use this financial product to its full potential.

    Get Professional Equity Release Advice

    Although it’s important to do your own research, getting professional equity release advice can save you a ton of money.

    An independent financial advisor (IFA) who is not tied to a specific product can provide impartial advice on different equity release plans and their costs.

    Shop Around for a Good Plan & Provider

    It’s important to shop around and compare equity release plans and providers because both vary widely in terms of costs and features. 

    The Equity Release Council website2 is a good starting point when looking for a reputable provider. 

    All its members have to adhere to the council’s strict standards, which have been put in place to safeguard you as a consumer. 

    Review All Regulated Plan Options

    The Financial Conduct Authority (FCA) regulates the two types of equity release plans - lifetime mortgage and home reversion - to ensure greater consumer protection.

    You can look up the regulations governing both in the FCA Handbook.3

    The regulations will give you a clearer understanding of the different kinds of plans and the costs involved, ultimately saving you money.

    6 Standard Costs & How to Reduce Them

    There are 6 standard costs involved in all forms of equity release plan, but with some clever thinking, there are ways to reduce them.

    #1 Property Valuation Fees

    Property valuation fees are charged by the equity release provider to determine the current value of your property. 

    The amount charged will vary and could be impacted by the value of your property.4

    #2 Providers’ Application Fees

    Providers’ application fees cover the costs of processing your application. 

    Look for a provider offering a low or no application fee to reduce costs.

    #3 Funds Transfer Fees

    Fund transfer fees cover the costs of transferring your released equity to your solicitor and then finally on to you.

    #4 Arrangement Fees

    Arrangement fees cover the costs of setting up the equity release plan. 

    Doing research will give you a clearer picture of what different providers charge.

    #5 Legal Fees

    Legal fees are applicable because the Equity Release Council standards require all borrowers to consult an independent solicitor to protect their interests.

    The cost depends on the work involved, such as registering your title or transferring the property into joint names.

    Your solicitor works for you, so you can choose who to use and, therefore, opt for one with lower fees.

    #6 Broker Fees

    You may need to pay a fee if you decide to use an independent broker to find the best equity release deal. 

    Many independent brokers don’t charge a fee but claim commission from the equity release provider.

    Others will only charge a flat fee if you proceed with the deal.

    3 Common Maintenance Fees & How to Reduce Them

    Besides the set-up costs linked to your equity release plan, there are some other payments to consider once your equity release plan is up and running.

    #1 Annual Administration Charges

    Annual administration charges are ongoing fees your provider charges for managing your plan. 

    Some providers offer low administration charges or no charges at all, so it’s worth shopping around.

    #2 Monthly Payments

    Making monthly interest payments to reduce the overall loan amount is now standard practice for many equity release plan holders.

    This will reduce the costs of your equity release plan in the long run because it reduces the effects of compound interest.

    #3 Early Repayment Charges

    Early repayment charges are applied if you choose to end your equity release early by paying it off.

    The interest on your equity release plan is calculated based on your plan ending when you die or go into long-term care.

    By paying it off early, you deny your provider that projected income, so they will likely impose penalties.

    Common Questions

    How Can I Minimise Equity Release Setup Costs?

    What Are the Common Equity Release Setup Costs in the UK?

    Are There Ways to Reduce the Costs of Equity Release?

    What Should I Know About Equity Release Setup Costs?

    Can I Negotiate Equity Release Setup Costs?

    What Does It Cost to Set Up Equity Release?

    Will I Need to Pay Equity Release Fees Upfront?

    Will Repaying Your Equity Release Reduce the Costs Involved?

    What’s the Best Way to Minimise Equity Release Setup Costs?

    Are Initial Equity Release Interest Rates Fixed for Life?

    Will I Have to Pay Estate Agent Fees on My Equity Release?

    In Conclusion

    To obtain the most favourable equity release plan, it is essential to consider the typical expenses involved, including property valuation fees, solicitor's fees, and monthly maintenance costs, and how to decrease them. 

    Take the time to compare rates, negotiate fees, and seek professional advice to minimise costs and achieve the most favourable outcomes.

    By exploring various techniques to minimise equity release set-up costs, you can secure the best possible deal and maximise the benefits of your equity release plan. 

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