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.
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.
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.
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:
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.
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.Calculate now