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How much does equity release cost?

Article | Mar 2024

Equity release is a popular option for homeowners over the age of 55 who want to get some tax-free cash. Any funds acquired through releasing equity from your home can be spent on a variety of wants and needs. It could be put towards purchasing a second home, gifting an early inheritance, or even paying for a dream retirement cruise.

If you are reading this, you might already be thinking that equity release is a good option for your personal circumstances. However, there are things to consider before going ahead with releasing equity from your property. One of the main questions Responsible Life’s advisers are asked is “how much does equity release cost?”

There are a few different costs associated with equity release, but the benefit of releasing equity with a Lifetime Mortgage is that you will never owe more than your home is worth.

In this piece, we will explain all the different costs of equity release. Information on how you can work out how much equity release will cost you will also be provided.

What are the different costs of equity release?

When making an application for equity release, it is important to keep in mind that there are some costs associated with the application process.

Valuation fees

One fee to keep in mind is the valuation fee for your property. Your equity release lender will need to value your home to work out how much money you can release. This may come with a service charge for a chartered surveyor.

Meeting with a solicitor

As part of the equity release process, you will need to meet with an independent solicitor. This ensures you have a legal expert to help you understand your contract. This will involve paying equity release solicitor fees, which would be paid to your solicitor independent from your lender.

Advice fees

Advice fees for equity release should also be considered. This is because before releasing equity from your home, you are required to consult with an expert. Responsible Life have qualified equity release advisers nationwide that can provide all the information you need and make a recommendation on whether it is right for you.

Responsible Life will only charge an advice fee, currently not exceeding £1,690, if you release equity. This means you can explore equity release options without any upfront charges, and fees are only applicable if you decide to move forward with the process.

Interest rates

When it comes to equity release, the interest rate is the final factor you need to consider when assessing the cost. Here’s what you should know:

All our products come with fixed interest rates that won’t change over time. These fixed rates help your adviser calculate precisely how much releasing equity will cost you. If you want to delve deeper, we’ve prepared a guide on equity release interest rates to assist you.

Understanding the interest rates is vital when exploring equity release options.

Other costs to consider

There are other less material considerations to make. Releasing equity will reduce the value of your estate, potentially affecting any future inheritance that you were planning to leave. Your entitlement to means-tested benefits could also be affected.

How much will equity release cost me?

The overall cost of equity release will depend on the individual circumstances of each homeowner that makes an application.

You will need to supply information such as the age of the youngest homeowner and an estimation of your property’s value to see how much you could release – check out our free equity release calculator to work this out.

The amount of money that you can release from your home will impact on the overall costs of how much you will pay back. However, the full amount will only need to be repaid once the last homeowner has passed away or entered long-term care.

You can reduce the overall costs that will need to be paid back by making voluntary interest payments during your lifetime. You often have the freedom to choose how and when you make these payments, whether that be monthly or in ad hoc sums. As they are voluntary, you are free to stop making these payments should your personal circumstances change.

Need more information on equity release costs?

If you feel you need any more information before you go ahead with equity release, schedule a call with our Information Team today! They can help assess your eligibility inform you of the process and book you in for a no-obligation advice appointment.

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