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Understanding the cost of equity release

Here, you can discover the factors to consider when it comes to the cost of equity release. From the impact of interest rates to costs associated with the application process, we have provided details below.

How much does equity release cost?

There are several factors to consider when looking into the cost of equity release. We have explained these in more detail on this page. After reading, you can complete a calculation and discover how much you could release.

Equity release interest rates

The interest rates on equity release are the primary cost that you are likely wondering about. With equity release, the interest compounds, meaning that the amount you owe will increase over time. Your interest rate will be fixed for life, and can have a significant impact on the cost of equity release over time. However, you will have the option to make payments if you want to.

Making voluntary payments

All new Lifetime Mortgages now allow homeowners to make penalty-free payments should they choose to do so. You’ll benefit from these being entirely optional, so you can plan to stop making them should your circumstances change. Consider whether you might want to make the following types of payment when researching the costs:

Make voluntary interest payments

You might choose to make payments towards the interest, either clearing it monthly or paying smaller contributions to reduce the amount that is added over time.

Make voluntary capital repayments

You might also choose to make partial repayments to reduce the amount that you owe. These can often be made up to 10% of the initial amount borrowed each year.

Your adviser will provide you with a document known as a Key Facts Illustration as a part of the advice process. This document details exactly how the amount that you owe will increase over time and will help you to consider the impact of choosing to make payments.

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Additional equity release costs

In addition to the interest rate and whether you choose to make any payments, there are some other costs for you to consider. These range from fees for our service to fees related to the application process.

Solicitor fees

Part of the equity release process involves meeting with an independent solicitor. Their role is to go through the contract with you and ensure that everything is clear and understood. There may be legal fees involved with this process, but they would not be payable to Responsible Life.

Valuation fees

As with most mortgages, your chosen lender will want to have your house valued so that they can give you an accurate mortgage offer. Having a chartered surveyor come to your home and complete a report can come at a cost.

Advice fees

Before you can release equity, you must seek out advice from a qualified equity release specialist. At Responsible Life, we can offer access to a member of our nationwide team of advice professionals. They will work with you to assess your circumstances and discover if equity release is right for you.

Your adviser will also provide a full illustration, indicating the cost that you can expect as well as the features and risks involved.

For a single fee, currently not exceeding £1,490, you will gain access to this as well as lifetime care to ensure that your equity release product continues to work for you. And, with no advice fee being charged unless you complete a plan, there’s no charge to meet with an adviser and enjoy a consultation.
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