The newer type of Equity Release, called a ‘Lifetime Mortgage’, is a flexible, fair, and trusted way of releasing money from your home to live a more comfortable retirement. Like a regular mortgage, there are some costs when taking out a Lifetime Mortgage. Although you’ll receive the full amount of equity you release as tax-free cash, you should expect a few fees when applying for and completing your transaction, but some providers may cover certain fees for you. The exact cost will depend on your circumstances and the product, lender and solicitor you choose. To find out exactly how much Equity Release will cost you please book in for your FREE no-obligation consultation. In this guide, we’ll explain what fees you may have to pay when taking out Equity Release as a Lifetime Mortgage so you can make a more informed decision before you proceed.
Equity Release Fees
Just as with a regular mortgage, your Equity Release provider will want an up to date valuation and survey done on your property. Surveyor costs can range from £400 – £1000 on average but some lenders will cover this for you, so it’s worth searching the whole market to see what deals are available to you. If you do have to pay a valuation and survey fee, you’ll usually do so when you apply for your plan. To find out more about the different types of property surveys click here.
Solicitor Fee
You’ll need to instruct a solicitor to handle the legal aspects of your Equity Release plan, and we can recommend trusted local solicitors who specialise in this area. If you would like to find your own solicitor, be sure to choose one who has experience in Equity Release transactions. The typical fee for an Equity Release solicitor can range from £500 – £1200 on average and this is usually paid once you receive your money on completion.
Lender’s Arrangement Fee
Some lenders charge an arrangement fee, or application fee, for certain products to cover their administration costs. This can vary from no fee at all up to around £1000 and is payable once you receive your money on completion. Sometimes, a product that comes with an arrangement fee can work out as a better deal in the long run, which is one of the reasons why it’s so important to seek professional advice before choosing a plan.
Advice & Setup Fee
It’s a regulatory requirement for you to obtain professional advice from a qualified Equity Release expert when applying for a Lifetime Mortgage. This is so you fully understand how Equity Release works before you commit. Your advisor will also help you choose a lender and product that suits your needs, and if you use a whole of market advisor like Michael Usher Equity Release you’ll have access to a wide range of products and receive unbiased advice. Our specialists are fully regulated by the Financial Conduct Authority and the Equity Release Council, and we’ve been trusted by our local community for over 30 years, so you can be sure you’re in safe hands! Our initial advice is free of charge. If you would like to proceed, we usually charge a competitive fee to apply for your Lifetime Mortgage and guide you through to completion smoothly. This can vary between £995 – £1495 depending on your circumstances, and in some cases, there’s no fee at all. If a fee is due, you won’t have to pay anything until you’ve received your tax-free cash after completion, so there are no upfront costs when using our Equity Release service.
How Much Interest Will I Pay With Equity Release?
You don’t have to pay any interest during the term of your Equity Release plan. Instead, you can let the interest roll up into the loan which will then be repaid to the lender once you die or move into permanent care and your house is sold. So with a Lifetime Mortgage, there are no mandatory monthly repayments, allowing you to spend more of your retirement income on the things you love! However, as the interest rolls up into the loan the overall amount you owe will compound over time. Despite this, you’ll never go into negative equity and you’ll continue to own and live in your home no matter how much you owe. If you wish to protect your remaining equity, you can choose to pay off the interest as you go to prevent the loan from compounding. Interest rates on Equity Release products tend to vary between 2.5 – 6% depending on your circumstances and which product you choose. We’ll search the whole market of Equity Release products to find the perfect deal for your circumstances during your FREE consultation.
The Bottom Line
As with a regular mortgage, you can expect some fees when taking out Equity Release as a Lifetime Mortgage. Some lenders will cover certain fees for you, and payable fees can vary depending on your circumstances and which lender, product, and solicitor you choose. The overall cost usually comes to between £1500 – £3000, but most of this is only payable once you receive your tax-free cash on completion. To find out exactly how much Equity Release will cost you, book in for your FREE no-obligation consultation. One of our specialist advisors will find out how much you’ll be able to release and explain all the potential costs before you commit. They’ll also search the whole market to find the most suitable deal for your needs and apply on your behalf if you wish to proceed.
At Michael Usher Equity Release we’ve been helping our local community with trusted Equity Release advice for 30 years. You probably have lots of questions and we’re here to help you understand how these products work and whether they are the right choice for your situation. We’re never pushy, the decision is always yours to make, and we welcome your friends and family to join in the discussion. Book your FREE no-obligation consultation with one of our friendly advisors to learn more about Equity Release. We have offices in Frimley and Basingstoke, or we can help you remotely via phone or video call if you’d prefer. We look forward to chatting with you!
