Just as if you were normally taking our a mortgage or re-mortgaging your home, an equity release loan includes some charges that you’ll need to pay.
What Costs Are Associated With Equity Release?
When you apply for equity release, you will need to have your house valued. You’ll also need to pay arrangement and consultation fees, and you’ll require the services of a solicitor.
With Equity Release, you’ll need to pay for a house valuation as well as arrangement and consultation fees. You’ll also need a solicitor who will charge for their services.
Continue reading to get the full details of all costs associated with Equity Release.
- – Equity Release while have bad Credit
- – What happens to your Equity Release if you die?
- – What are the Equity Release time frames?
- – Why is Equity release so popular?
We update all our guides regularly. If you are researching Equity Release and we haven’t got an exact guide that helps you, keep coming back as we update daily.
What Are the Equity Release Charges?
There are four main charges that you’ll likely need to pay when you opt for equity release. The first will be a valuation fee, when your lender sends an independent surveyor (independent surveys list) to your home to value the property and check for any issues that may affect the selling price in future.
Then, there’ll be the arrangement fee, charged by the lender for the execution of the equity release plan. This’ll vary, and could be a set figure between £500-£1000, or it might be a percentage of the final loan you’re given. You don’t need to pay this upfront, but if you decide not to, it’ll be added to your loan debt and it’ll accrue interest.
Using an Equity Release broker can help you get the best Equity Release deal as they have access to the whole market.
Your broker might also charge a consultation fee, which is likely to be around 1.9% of the loan but could again be a fixed fee. And then finally, you’ll have to instruct a solicitor to act on your behalf to sort out the legalities and make sure everything is taken care of from your end, so they will also charge you for their services.
With the exception of your solicitor fees, everything else will be detailed for you when you first apply with the lender. It should be clearly set out in the key terms so that you aren’t misled in any way. Your solicitor will bill you separately.
According to the Equity Release Council 37,000+ people used Equity Release schemes in 2018, releasing over £3.06bn from their properties.
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Are There Any Costs for Equity Release Early Repayment?
There may come a time where you decide you need to end your equity release plan early. Usually it’s when you’ve decided you want to sell your home to downsize, but you can’t just transfer the plan to your new property as it doesn’t have the same value.
In order to do this, you’ll need to pay an early repayment charge. This will vary from lender to lender (full list of Equity Release lenders), so you’ll need to make sure you read your equity release agreement in full before you make any decision.
Some firms will have a set early cancellation fee, while others will calculate it on a regular basis depending on various factors related to their lending. Sometimes you’ll have a repayment fee which drops over time – it may start at 15% of the loan value and then every year drop by 1%, for example, until after 14 years you’d only have to pay a 1% fee to repay the remainder early.
Your financial adviser and solicitor will help you to understand the charges you’d be due to pay for your chosen lender, so you were fully clear.
Quick Equity Release FAQs
Home reversion plans are, in essence, a means of selling a share in your property to an investor, in exchange for payment. There are no repayments, with the investor receiving their share of proceeds when the property is eventually sold.
The Equity Release Council is the industry body which represents equity release providers, qualified financial advisers, solicitors and intermediaries. Equity release is a growing sector, especially for older homeowners who may have limited access to finance.
You need to be at least 55 years old to apply for equity release in the UK. If you are planning to make a joint application, this applies to both of you.
Equity release drawdown works by giving you the value of your loan as a pot that you can make withdrawals from. You’ll only pay interest on the money you decide to withdraw.
Equity Release enables you to release cash from your property. There are two option, a drawdown lifetime mortgage is allowing you to release the money monthly or a Lifetime mortgage Lump Sum which pays the released cash in one payment to your account.
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How Can Money Savings Advice Help You With Releasing Equity?
Here at Money Savings Advice, we have partnered with some of the UK’s leading Equity Release brokers. They have already helped thousands of people get the best Equity Release deal and they can do the same for you.
Choosing an independent adviser means they won’t recommend a scheme unless they are sure it is in your best interests. Their advice is also regulated by the FCA, which gives you an additional layer of protection.
If you would like to speak to one of these brokers who can provide you with a ‘whole market quote’ then click on the below and answer the very simple questions.
Len Burgess
Len Burgess is a professional financial writer who over the last five years has written hundreds of articles for all financial sectors. Len founded Money Savings Advice with the aim of helping consumers navigate their way around the financial world by providing easy to understand financial information and matching consumers with the best financial advisor based on their personal information.
