How much does equity release cost?

If you think equity release might be the right solution for you, you’ll need a clearer picture of the costs involved. This includes interest rates, set-up costs and arrangement fees.

What are the initial charges?

Lifetime mortgages are by far the most popular form of equity release. Some lifetime mortgage products have arrangement fees to cover set-up and legal costs, while others have none. An equity release adviser will ensure you understand the charges associated with any product they recommend.

What are the interest rates for equity release?

The average equity release interest rate was 4.07% on 26 April 2021.

The interest on your lifetime mortgage will depend on how long it runs for and what type of plan you choose. For example, with a ‘roll-up’ lifetime mortgage, it works like this:

  • At the end of the first month (or year), the interest charged is added to the original loan.
  • This interest is then ‘compounded’. This means it’s calculated on the sum of the original loan, plus the interest charge in the first month (or year).
  • With each month (or year) that passes, this process continues.
  • The interest owed is calculated monthly (or yearly), based on the larger amount – even though the interest rate stays the same.

Can you pay the interest?

With many lifetime mortgage products you have the option to pay off all or part of the interest. Some even have options for making payments against the loan amount.

Otherwise you can let the interest “roll-up” (or compound) in the knowledge you will not go into negative equity (owe more than your property is worth) or have to move out.

What other fees are involved with equity release?

Valuation fee

This may be payable depending on your house value and the chosen lender. If required, it is payable at the time you submit your application and will cover the cost of an independent valuation of your property.

Solicitor fee

Your solicitor will charge you a fee for providing you with independent legal advice. You’ll be responsible for paying these fees.

If you use OneFamily Advice we can introduce you to our award-winning partners Equilaw, the recognised leader in this field. They charge a fixed fee of £800 (including VAT) for a standard equity release transaction.

What’s the total cost of equity release?

According to Money Saving Expert, the costs associated with equity release can total between £1,500 and £3,000.

It’s impossible to offer a more precise figure because there are so many variable factors at work – for example different lenders charge different application fees. Some lenders even offer cashback deals that will cover the cost of the application fee for you.

Our advice fee

OneFamily advice is provided by qualified, experienced advisers, who do not work on commission. To keep the process as simple and transparent as possible, we charge a single advice fee of £950, no matter the size of your loan.

How our fees compare

Many of our competitors use a percentage fee to charge for their advice. The following table shows how typical percentage fees compare to our fixed fee over a range of low, average and higher loans.

£100,000 £950 £1,950 £2,000 £2,250
£80,000 £950 £1,560 £1,600 £1,800
£60,000 £950 £1,170 £1,200 £1,350
£40,000 £950 £780 £800 £900
£20,000 £950 £390 £400 £450

Find out more about how our fees compare..

As well as a percentage of the loan, most advice providers also have a minimum fee for their whole-of-market advice services.

OneFamily Advice N/A £950 N/A N/A
Equity Release Supermarket N/A £995 N/A N/A
Key* 1.99% N/A £1,499 N/A
Age Partnership N/A N/A N/A £1,795

OneFamily Advice and competitor advice fees, as on 25 February 2021.

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Maximum loan amount:

Important: The loan amounts above are an illustration of the amount you could borrow. The actual amount may vary depending on your individual circumstances. The figures are not guaranteed and do not constitute an offer to lend. The loan amount will need to pay off any existing mortgage secured against the same property.