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Author: Carl Shave-Director
Updated on January 30th, 2024

What costs are involved with Equity Release?

Just like a traditional mortgage product, Equity Release does entail a few costs. However, these are usually kept to a minimum and quite often you will see deals where the lender will cover some of them for you.

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How much does Equity Release cost?

We understand nobody likes nasty surprises further down the line, and want to make sure you feel informed about every step of the process. Below we run through the main costs you should expect when using Equity Release to access the wealth tied up in your property, but please speak to our team for more information.

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What costs are involved in Equity Release Mortgages?

What is the valuation fee for Equity Release Mortgages?

The lender will send a representative to make a valuation of your property. Depending on the location and property type, this could be a full valuation or a short inspection by a surveyor. The fee varies but is often free of charge.

What is the arrangement fee for Equity Release Mortgages?

Similar to a mortgage, the lender may charge a fee for setting up the Equity Release loan, and this will be quoted in your written offer. It will be either a set amount (anything between £500-£1000) or a percentage of the loan value, and payable when the loan is in place. You can pay it separately or it can be added to the total amount borrowed, in which case you will also pay interest on this amount.

Some lenders charge more than others, but might also provide benefits others do not. Your adviser will take all this into account when looking at the right plan for you.

What are the solicitor’s fees for an Equity Release Mortgage?

Unfortunately we cannot estimate how much your solicitor would charge – this will be between you and them, and will vary according to the individual. However, we do work regularly with a few reputable and reasonable legal firms with experience in mortgages and Equity Release, and would be happy to recommend one you can trust.

What is the consultation fee for an Equity Release Mortgage?

This is the fee charged by your Equity Release broker, and will either be a percentage of the loan amount, or a simple flat fee. Fees vary between brokers, so it’s advisable to shop around and compare charges, as well as levels of service. The consultation fee is usually charged upon completion of the agreement, so if you don’t go ahead with the Equity Release plan, you won’t have to pay anything.

What are the interest rates for Equity Release Mortgages?

As with any loan or mortgage product, interest will be charged on the amount borrowed. In the case of Equity Release, you can choose not to pay until the loan comes to an end – when the borrower either dies or goes into permanent nursing care, and the property is sold. Rates for a wide variety of products are available online and will vary between 4.6%-7%. Most interest rates will be fixed or capped for the life of the loan and will usually be applied on a ‘roll-up’ basis as the term progresses.

All charges that apply to your Equity Release loan will be detailed in the personal illustration of the scheme that your broker will provide. Don’t accept any deal that does not give you a complete breakdown of the charges.

How can I get the best interest rate for an Equity Release Mortgage?

An Equity Release Plan with the lowest rate may seem ideal, but it may not be the best deal in the current market. This is due to differences in interest rates on equity release loans, which can be based on the loan size, the value of your house, the location and even the provider and schemes themselves.

Going through the huge amount of schemes on the market to find a favourable interest rate can be a difficult, confusing and exhausting process, but it doesn’t have to be. Approaching an independent adviser or equity release broker can assist in this process and help you gain access to exclusive deals not featured on a lender’s website. Find out more about the best Equity Release interest rates here. 

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The good news for Equity Release Mortgages

The Equity Release market has become more competitive recently, and many lenders are now offering incentives or free services to attract your business.

Depending on the size of the loan, some lenders might offer a free valuation, or waive their application fee, or contribute to your legal or consultation fees.

Again, your advisor will take all these aspects into account when recommending which Equity Release scheme is the right one for you. What might look like an attractive deal on the surface could be more expensive in the long run.

Remember: It doesn’t cost you anything to find out more about Equity Release, and you won’t be charged for the initial conversation with our adviser.

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