Releasing equity in your home can be a useful way of freeing up cash for a number of things. From providing help for your children and grandchildren, to making home improvements or achieving retirement goals, there are many reasons why homeowners might choose an equity release plan.
If you’re considering an ER plan, you probably have a number of questions regarding how much it actually costs. In this article, we’ll aim to provide answers to some of the most often-asked questions regarding the cost of Equity Release and how best to go about it.
The main costs associated with equity release and lifetime mortgages are:
– Arrangement fees: Also known as an application fee, this is the price charged by providers to set up the equity release process.
– Legal fees: A specialist solicitor is needed for the process, they will be your conduit between the provider and yourself.
– Advice fees: Some advisers may charge you for advice and information regarding the products they offer.
– Valuation fees: Again, some providers may charge you for the valuation of your property, however as with advice fees, this won’t be the same across all providers.
– Interest payments: The interest charged on your loan varies depending on the type of plan you opt for as well as the length of time the loan runs for.
As mentioned above, hiring a specialist solicitor is an important part of the process as they will act on your behalf and ensure all the legal implications are considered before you sign on the dotted line. The costs can vary considerably, which is why it is vital to shop around and look for various quotes before you come to a decision; typically costs will run into the hundreds.
As with all costs associated with equity release, advice fees vary a great deal depending on the provider and the service they provide. Some are tied to one lender, some use a panel and some are whole of market. As such some charge a percentage of the amount released – between 1% and 2% with a minimum fee – others could charge a single flat fee on completion of the plan.
Your adviser will charge a fee for their services, which may be either a percentage of the amount released or a fixed fee. Because fees differ from one adviser to another, it’s worth taking time to compare the service and the charges and assess what type each offers before deciding on the one to use.
The rates on offer vary significantly due to factors like age, loan-to-value, location and the construction type of the property, so it is hard to give an exact figure. It is best to speak with an advisor when you are ready to look into Equity Release to get the latest numbers.
At Bower, we will understand your unique circumstances and advise you to ensure you are receiving the best plan to meet your objectives. There are plans that allow you to make voluntary repayments and move home, subject to lender criteria. However, early repayment charges may apply in certain circumstances.
Equity release requires paying off any existing mortgage. Any money released, plus accrued interest to be repaid upon death, or moving into long-term care. Equity release will reduce the value of your estate and your entitlement to means-tested benefits now or in the future, and impact long-term care funding.
Bower Home Finance provides independent, impartial whole of market advice with an award-winning customer service experience. Initial advice is provided at no cost to you and without obligation. Only if you choose to proceed and your plan completes, would a typical advice and administration fee of £1,495 be payable.
If you are considering equity release, we strongly recommend that you read our equity release page carefully and talk to one of our specialists before deciding if you wish to proceed.
To find out more about any of the products and the service we provide, please call us on freephone 0800 411 8668, request a call back, email us, or join our live chat you’ll find on our website.
Please be aware that equity release may involve a home reversion plan or lifetime mortgage which is secured against your property. All features and risks are thoroughly explained in your free personalised illustration.
