What are the costs of equity release?

As equity release continues to grow in popularity for homeowners aged 55 and over, it is important to ensure that anyone considering equity release is fully informed of the benefits, the potential risks and the costs involved.

As so many of us approach retirement with value in our property but poor cash flow to live on, it is clear why more of us are taking equity out of property to use for things like home improvements, a good standard of living, helping children financially and even holidays and major purchases such as a reliable car.

So is it an option for you to consider and if so, what are the costs?

To help you stay informed,  we have compiled a handy check list to run through with your adviser. Our advisers are always happy to answer all of your questions about equity release.

Fees are broken down into:

  • Advice fee
  • Application fee
  • Solicitor fee
  • Surveyor fee
  • Lender charges

Advice Fee

The Financial Conduct Authority (FCA) rules on equity release make it compulsory for anyone using these products to get expert financial advice from a fully qualified and FCA regulated adviser. As well as financial advice they will also carry out research, admin work and process the application.

At Access Equity Release our advice fee is only applicable if you decide to go ahead with equity release, and is only paid on successful completion of your Equity Release lifetime mortgage. This means that your initial consultation, our expert advice on whether or not equity release is a suitable product for you, our detailed research into your options and our recommendation (where appropriate for the client in question) are only charged for if you decide to go ahead with equity release. This helps to ensure that there are no unnecessary costs and you can fully explore your options. Find out more.

Application Fee

Just like a typical mortgage, some equity release firms (both advisers and lenders) may include an application fee at the start of the equity release application process. Once again these must be made clear before an application is made. Our advisers will discuss this with you alongside all the other costs when researching the right product for you.

Solicitor Fee

There will be some necessary conveyancing and other legal work and there will be a fee for this work which will be explained fully by your adviser during the process.

Surveyor Fee

In order to value your home an inspection will need to be carried out. This valuation will be given to the Equity Release provider (lender) at the time you take out the plan. Lots of providers offer to cover this cost for you, so it is effectively a free valuation. Once again our advisers can help you find the products offering a free valuation if this is important to you.

Lender Charges

Equity Release is typically done using a Lifetime Mortgage, and as you’d expect, the lender will charge you interest on what you borrow. Interest rates vary from below 4% to over 6%, so make sure you discuss your needs and preferences with an adviser who will find the best value product for you.

The amount of money that you can release using equity release will depend on several factors. For example a lender will take into account your age, the value of your home and any mortgage or other loans secured against it. However a good first guide, to get an idea of what might be possible, is to use our handy equity release calculator. This will give you an instant guide estimate and you can also book a call back from a member of our team to find out more information.

According to the Equity Release Council, overall costs which include all of the fees and charges described above typically range between £2000 and £3000. Your adviser has a responsibility to explain all these costs with you so there are no nasty surprises.

Independent money advice experts including Martin Lewis of Money Supermarket suggest that you should always use a member of the Equity Release Council to advise you on Equity Release. Access Equity Release is a member of the Equity Release Council and we are always available to answer your queries about equity release. From your very first contact with us you will have a personalised service and no anonymous call centre agents or long waits on hold. Get in touch. 

Access Equity Release is a trading name of Your Mortgage Decisions Ltd which is authorised and regulated by the Financial Conduct Authority FRN 459763.