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 4.9% on 9th March 2020, with some products’ interest rates as low as 2.59%.

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?

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 £750, no matter the size of your loan.

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The initial consultation
is absolutely free.

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The first £250 is payable after you have received our full recommendation and only once you have decided to proceed to application.

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The final £500 is then payable on completion of the lifetime mortgage and release of funds.

How our fees compare

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

Loan amount OneFamily fixed fee 1.95% fee 2% fee 2.25% fee
£100,000 £750 £1,950 £2,000 £2,250
£80,000 £750 £1,560 £1,600 £1,800
£60,000 £750 £1,170 £1,200 £1,350
£40,000 £750 £780 £800 £900
£20,000 £750 £390 £400 £450

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

Broker Interest rate Fixed fee Minimum fee
OneFamily Advice Not applicable £750 Not applicable
Equity Release Supermarket Not applicable £995 Not applicable
Key* 1.99% Not applicable £1,499
Age Partnership 1.95% Not applicable £1,495

OneFamily Advice and competitor advice fees, as on 10th March 2020.

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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.

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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 £2,000 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.

Find out how much equity you can release

Find out how much equity you could release with our lifetime mortgage calculator and download your free guide to equity release.

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Maximum loan amount:

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Speak to an adviser

Our friendly team of advisers are ready to help you, so why not spare a few minutes for a free initial consultation? You can ask any questions and we’ll be able to let you know how much you could borrow.

0800 144 8234*

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OneFamily Advice is the trading name of OneFamily Advice Limited. OneFamily Advice Limited is registered in England and Wales at 16-17 West Street, Brighton, BN1 2RL registered number 09188369 and is authorised and regulated by the Financial Conduct Authority.