Equity release allows homeowners aged 55 and over to unlock tax-free cash from their property, but like any financial product, it comes with associated fees and charges. Understanding these costs upfront will help you make an informed decision and avoid any unexpected surprises.
In this guide, we’ll break down the main fees associated with equity release, what they cover, and how to minimise costs where possible.
What Fees Are Involved in Equity Release?
Equity release costs can be divided into two main categories:
- Upfront Costs – Fees you pay during the application process.
- Ongoing and Exit Fees – Costs that apply during the lifetime of the loan or when the plan is repaid.
Let’s explore each in more detail.
Upfront Fees for Equity Release
1. Equity Release Advice Fee
📌 What is it?
To take out an equity release plan, you must receive advice from a qualified equity release adviser. They will assess your financial situation, explain all options, and recommend the most suitable plan.
💰 Typical Cost: £0 – £1,500
✔ Some advisers offer free initial consultations, while others charge a fixed fee or percentage of the loan amount.
💡 How to Minimise:
Choose an Equity Release Council-approved adviser who offers competitive fees. You can also check if the lender covers this cost.
2. Valuation Fee
📌 What is it?
Lenders require a property valuation to determine how much equity can be released.
💰 Typical Cost: £0 – £500
✔ Many lenders offer free valuations, but some may charge if the property is unusual or high value.
💡 How to Minimise:
Ask lenders if they offer free property valuations as part of the deal.
3. Solicitor Fees
📌 What is it?
A solicitor ensures you understand the legal aspects of equity release and that your interests are protected. They will:
✔ Review the contract
✔ Handle legal paperwork
✔ Ensure funds are released correctly
💰 Typical Cost: £650 – £1,500
✔ Fees vary based on the complexity of the transaction and the solicitor’s experience.
💡 How to Minimise:
Compare solicitor quotes and choose a fixed-fee service to avoid unexpected costs. Make sure they are Equity Release Council-approved.
🔗 Read more: How to Find the Right Equity Release Solicitor
4. Lender Arrangement Fee
📌 What is it?
Some lenders have a one-time fee for setting up the equity release plan, but most don’t.
💰 Typical Cost: £0 – £1,000
✔ Most lenders waive arrangement fees, while others include them in the loan amount.
💡 How to Minimise:
Look for plans with no or low arrangement fees.
Ongoing and Exit Fees for Equity Release
5. Interest on the Loan
📌 What is it?
Unlike traditional mortgages, equity release loans do not require monthly repayments—instead, interest is rolled up (compounded) over time.
💰 Typical Cost: 5.5% – 8% per year (fixed or variable rates)
✔ A loan of £50,000 at 6% interest could grow to £96,000 in 12 years due to compound interest.
💡 How to Minimise:
✔ Choose a plan with the lowest fixed interest rate available.
✔ Consider voluntary repayments to reduce interest accumulation.
🔗 Read more: Can You Pay Back an Equity Release Mortgage Early?
6. Early Repayment Charges (ERCs)
📌 What is it?
If you choose to repay your equity release plan early, lenders may charge a penalty.
💰 Typical Cost: 5% – 25% of the loan amount (varies by lender)
✔ Most lenders offer penalty-free partial repayments, while others have fixed or variable ERCs.
💡 How to Minimise:
✔ Check for plans with flexible repayment options.
✔ Look for lenders that allow voluntary payments without penalties.
🔗 Read more: Can You Pay Back an Equity Release Mortgage Early?
7. Buildings Insurance Requirement
📌 What is it?
Lenders require buildings insurance to protect their interest in the property.
💰 Typical Cost: £100 – £300 per year
✔ If you already have home insurance, you won’t need to pay extra.
💡 How to Minimise:
✔ Shop around for the best home insurance policy, also talk to your financial adviser for a comparison quotation.
8. Home Maintenance Requirements
📌 What is it?
You must maintain your home in good condition throughout the equity release plan.
💰 Typical Cost: Variable, depending on property condition
✔ Some lenders require periodic property inspections.
💡 How to Minimise:
✔ Keep up with routine maintenance to avoid costly repairs.
Total Estimated Costs of Equity Release
| Fee Type | Typical Cost |
| Adviser Fee | £0 – £1,500 |
| Valuation Fee | £0 – £500 |
| Solicitor Fee | £650 – £1,500 |
| Lender Arrangement Fee | £0 – £1,000 |
| Interest on Loan | 5.5% – 8% per year |
| Early Repayment Charges | 5% – 25% of loan amount |
| Buildings Insurance | £100 – £300 per year |
| Home Maintenance | Varies |
While some fees are avoidable, others—like interest—are unavoidable unless repaid early.
FAQs About Equity Release Fees
Do I Need to Pay Upfront for Equity Release?
Some fees, like solicitor and adviser costs, may be paid upfront, but many lenders allow fees to be added to the loan.
Are There Any Hidden Fees?
Reputable lenders provide transparent fee breakdowns, so always review paperwork carefully before signing.
Can I Avoid Paying Interest on Equity Release?
Interest is always charged, but you can reduce costs by:
✔ Taking a drawdown plan (only borrowing what you need).
✔ Making voluntary repayments.
🔗 Read more: Can You Do Equity Release More Than Once?
Next Steps
Understanding the fees involved in equity release is essential to making an informed decision. To explore your options:
- Speak to an expert on our Equity Release Adviser page.
- Use our Equity Release Calculator to estimate how much you could unlock.
- Read more about equity release in related articles:
By understanding the fees involved, you can make the best decision for your financial future.
